Due Diligence and Ongoing Monitoring

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  • 1.  Indirect Lenders / Purchased Pools / Brokers

    Posted 01-27-2022 12:07 PM
    Ok, how do you handle due diligence and classification of these type of relationships.  I get a constant resistance from my internal team that these relationships aren't considered vendor relationship and they never want to do the due diligence and risk assessment on these, so I'm looking for ammo as to what the regulators think we need to track as well as gain from your lessons learned on what to do.  I'm considering them a vendor relationship, because they are a relationship we have with another company that we did business with them, and hence exposes the bank to a one-time or ongoing risk.  Your thoughts?


  • 2.  RE: Indirect Lenders / Purchased Pools / Brokers

    Posted 01-27-2022 12:33 PM
    I would be interested in information on this as well.


  • 3.  RE: Indirect Lenders / Purchased Pools / Brokers

    Posted 01-27-2022 01:04 PM
    I too received a huge push back from my internal team regarding ongoing monitoring of these vendors so I reached out to NCUA for guidance. Ultimately we decided to remove the indirect dealers from Venminder and it is now the responsibility of the Indirect Dept. Below is what NCUA sent me. Hope this helps. 

    There is not a rule that explicitly says that an indirect dealership needs to be documented within the Vendor Management Software. The guidance is broader and generally allows credit unions to determine what methods fit their given situation, as long as the risk is appropriately identified, measured, monitored, and controlled. Letters to Credit Unions 07-CU-13 and 10-CU-15 and their enclosures provide guidance on third party risk management and indirect lending. The expectation outlined in the guidance is that credit unions engaging in third party relationships must have an infrastructure (i.e. staffing, equipment, technology, etc.) sufficient to monitor the performance of third party arrangements. When it comes to indirect lending, vendors would include any CUSO or third party used to facilitate indirect lending, as well as automobile dealerships.




  • 4.  RE: Indirect Lenders / Purchased Pools / Brokers

    Posted 01-27-2022 01:07 PM
    Not a Credit Union so can't apply NCUA reqs, Community bank here but thank you