By the Division of Banks

Permissibility Of Leasing Excess Space To A Financial Planning Firm

It is the position of the Division of Banks that a credit union may lease excess space in a branch office established under Mass. Gen. Laws chapter 171, § 8. Leasing such space to a financial planning firm would raise certain issues of concern to the Division. It is important that the proposed income is not based on sales referrals or other actions by the credit union related to the firm. Also, the credit union must take affirmative steps to ensure that a customer knows exactly with whom business is being done at any particular point in a business transaction. Written disclosures, signage, and separation of functions help make such relationships clearer. Written disclosures could also be used to make sure a customer understands that NCUA insurance coverage does not apply to products of such a financial planning firm. In addition, the credit union's directors or counsel should review its involvement with a financial planning firm and determine whether laws or regulations of other agencies such as the Securities Division of the Commonwealth's Secretary of State or the Securities and Exchange Commissioner would be triggered by the proposed activities.