By the end of summer, regulators plan to hand down the final rules governing the operations of credit union service organizations, the special entities formed to provide financial or operational support to credit unions.

Finalized rules come a year after the National Credit Union Administration, which regulates federally insured credit unions, issued a proposal to have service organizations, or CUSOs, submit regular financial reports.

Members of the credit union community grew concerned that service groups would encounter onerous costs in complying. About 290 individuals and groups sent comments to the agency in response to the proposal, most came out against regulations.

NCUA Chairwoman Debbie Matz said she took the letters into consideration in deciding to require annual, rather than monthly or quarterly, reporting. She said the agency may also allow new CUSOs to register within 60 days of formation, instead of 30 days to give them time to get settled.

“We want this to be minimally invasive because we are concerned about the burden,” she said. “We want to make sure that this proposal wasn’t so sweeping that it has an adverse impact on CUSOs that don’t pose a threat to the system.”

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CUSOs originally took form in response to regulatory restrictions on individual institutions, and they are now commonplace in the industry.

As credit unions struggled to generate profits amid weak loan demand, low interest rates and increased costs in the wake of the downturn, investments in CUSOs have soared. Roughly 760 of these organizations exist with more than $2 billion in funding from credit unions, according to Callahan & Associates, a District-based provider of analytical services for credit unions.

Supporters of the collective model say it provides credit unions with more cost effective options for credit card management, mortgage origination and brokerage services that may be difficult to offer on their own.

But Matz insisted the agency must ensure that service organizations operate in a way that poses minimal risk to the insurance fund. The agency, as it stands, can only regulate service organizations through the credit unions that invest in them.

An examiner can compel a credit union to break off from an organization, if participation creates too much risk on the institution’s balance sheet. Credit unions can invest no more than 1 percent of their total assets, and undercapitalized federal credit unions are restricted from participation all together.

Matz said the agency, as a result of industry feedback, is considering placing parameters around the duration of time in which credit unions must operate under the investment cap. The cap would be limited to the cumulative cash outlay over the last seven years.

The NCUA would have all service organizations register with the agency, providing basic information about what they do, who their officers are and where they are located.

However, she said, “The subset of organizations we consider highly complex or high risk — lending and IT CUSOs — will have to report their financials and client list.”

Mary Dunn, senior vice president and deputy general counsel at the Credit Union National Association, said the trade group supports registrations as long as it is not burdensome for credit unions or the CUSOs in which they invest.

“We don’t want the NCUA to turn a blind eye to any impropriety, but we don’t want the NCUA to stymie outlets for innovation, and that’s exactly what CUSOs are,” she said.

Matz said it will take time for the rules to take effect.

“We’re assuming that if we finalize the rule this summer it’s likely we won’t require reporting until January 2014,” she said.