Reg CC Change In Terms Notice Timing Requirements
Adam uses this Compliance Clip (video) to answer this question: Is a change in terms notice required for the upcoming July 1, 2020 changes to Regulation CC, and if so, is advance notice to our customers required? The reality is that this single topic is causing a lot of confusion in the industry and many have been told incorrect answers to this question. Therefore, Adam sets the record straight in this short, free video.
For those interested in more resources to assist with rolling out the new Reg CC changes by July 1, 2020, be sure to check out our Reg CC Training for Tellers by clicking here.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about the Regulation CC change in terms disclosures, specifically, the timing of when those disclosures must go out.
As you know, there is a new change to Regulation CC coming up on July 1, 2020. In fact, that's the date when you have to have all of these changes effective, and everything goes into place at that time. There's been a lot of confusion around this rule, and so we have a couple of training programs in our store that address that. But one of the questions we keep seeing repeatedly relates to the change in terms disclosures. Specifically, the question is, “For the upcoming July 1, 2020 changes, do we need to send a change in terms of disclosure in advance to customers?” That's a question we see quite a bit.
The answer, of course, comes from Regulation CC Part 229.18(e), and what it says in this section of the regulation is, “A bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank's availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later the 30 days after implementation.” The commentary goes on and expands on this. The commentary says that if the change results in faster availability of deposits, for example, if the bank changes its availability for now local checks from the fifth business day after deposit to the fourth business day after deposit, in essence, making funds available sooner, then the bank need not send advance notice. The bank must, however, send notice of the change no later than 30 calendar days after the change is implemented.
So, in our original question, which was of course, do we need to send a change of terms notice about these new rules that are required on July 1, 2020, does that notice need to be 30 days in advance for customers or can it be after the fact? That's really our question here. The question then becomes relating to this is, are we making things more difficult for the customer or are we giving them availability sooner? That's really what it comes down to for your change in terms of disclosures. Does it negatively affect the customer or does it benefit them?
What's happening with these changes that take place on July 1, 2020 is what? What's happening is that we are increasing our thresholds on the amount of funds that we must get available to the customer. It's based on inflation. For example, the amount of $200 for next day availability is increasing to $225. So what does that mean to the customer? Are they getting more money sooner or they're getting less money? Does it hurt them or does it benefit them? So from going from $200 to $225, that's actually a benefit because the customer now has more money in their pocket. All of these stressful changes are actually expediting funds availability for the consumer, which of course then means that we're permitted to send them the notice no later than 30 calendar days after we implement the change. Of course, you can send it in advance. If you know you're going to roll this out on July 1, 2020, why not send it during your second course statement cycles, makes a lot of sense to do that. But the technical rule here is that since we are giving availability to customers, making more funds available to them sooner than that change notice disclosure is required 30 days after we implement the change. That's how this works.
As you can see, this is quite complicated. It's not as simple as it could be, and that's why these rules are going to be so challenging. In fact, if you are looking for some assistance in ruling out these changes in your organization, take a look at our Reg CC Training for Tellers. It's available in our store. It's really a huge resource. There's a ton of resources in there. We are actually throwing in a bonus training program. There's a quiz, there's a manual, there’s slides you can download, you can change the slides, lots of different resources available to you. So take a look at that. There's even some sample videos in there from the exact programs. You can see exactly what you're going to get if you purchase this program. That's in our store at compliancecohort.com.
That's all I have for you today for this Compliance Clip.