Here, in Utah Bankers Association vs. Utah Department of Financial Institutions et al., fifteen Utah credit unions filed an application with the Utah Department of Financial Institutions to provide service centers for their members.

The application sought to allow the Credit Union Service Centers of Utah, Inc. [hereinafter CUSC] to operate service centers for credit unions as consumer fund transfer facilities, to participate in regional or national networks for performing financial transactions, to accept and process loan applications for participating credit unions and conduct services authorized for Utah credit unions.

The application for the CUSC was approved by the Utah Department of Financial Institutions. Thereafter, the Utah Bankers Association [hereinafter UBA] filed suit against the approving Department as well as the CUSC, alleging that such an organization would permit the participating credit unions to use the CUSC to solicit memberships, in violation of the field of membership, or to otherwise engage in activities not permitted for credit unions. The UBA further stated that the CUSC “has and will result in competitive and economic injury to Utah banks.”

The Court of Appeals of Utah found that the Department of Financial Institutions properly approved the CUSC, and specifically noted that:

CUSC has presented uncontroverted evidence that participation in service centers will enhance the convenience and availability of credit union services to credit union members . . . . In keeping with Utah’s desire to be on the forefront of technology utilization, service centers present an undeniable opportunity for all financial institutions. Credit union service centers are in the best interest of the public.

Author: Charles R. Harroun, Attorney at Law