Regulation CC and Change in Funds Availability

Issue/Inquiry

The Bank’s Funds Availability Disclosure provided to its customers at the time of account opening and the ATM Disclosures that are displayed at our ATMs presently state the following:

The cut off time for ATM deposits made on a business day that the bank is open is 10pm. Deposits made at the ATM after 10pm on a day that the bank is open will be considered the next business day. In addition, ATM deposits made on a day that the bank is not open will be considered the next business day.

A recent review of the Bank’s system configuration indicated that the cut-off time for ATM deposits made on a business day is actually 7pm and not 10pm, and that deposits made at the ATM after 7pm on a day that the Bank is open would be considered the next business day. In addition, ATM deposits made on a day that the Bank is not open will be considered the next business day.

The Bank wishes to correct the discrepancy between the disclosure and system processing by making the disclosure conform to the processing parameters. Will it be necessary to provide prior notice before implementing the change?

Response Summary

Under Regulation CC, the Bank must send consumer accountholders a notice of the change at least 30 days prior to implementing it. The proposed language will be appropriate for that purpose.

Response Detail

Under Regulation CC, a financial institution must provide a disclosure describing its policy as to when funds deposited in an account are available for withdrawal. The disclosure must reflect the policy followed by the institution in most cases. The institution may impose longer delays on a case-by-case basis or by invoking one of the exceptions permitted by the regulation, such as for deposits into new accounts or in excess of $5,000, provided that this is reflected in the disclosure. 12 CFR §229.16(a).

The specific availability policy disclosure shall contain the following, as applicable:

• A summary of the financial institution's availability policy

• A description of any categories of deposits or checks used by the institution when it delays availability; how to determine the category to which a particular deposit or check belongs; and when each category will be available for withdrawal (including a description of the bank's business days and when a deposit is considered received)

• A description of any of the exceptions that may be invoked by the bank, including the time following a deposit that funds generally will be available for withdrawal and a statement that the bank will notify the customer if the bank invokes one of the exceptions

• A description of any case-by-case policy of delaying availability that may result in deposited funds being available for withdrawal later than the time periods stated in the bank's availability policy

• A description of how the customer can differentiate between a proprietary and a nonproprietary ATM, if the bank makes funds from deposits at nonproprietary ATMs available for withdrawal later than funds from deposits at proprietary ATMs. 12 CFR §229.16(b).

The financial institution must send a notice to holders of consumer accounts at least 30 days before implementing a change to its availability policy regarding such accounts. However, if a change expedites the availability of funds, it may be disclosed no later than 30 days after implementation. 12 CFR §229.18(e).

In this case, the Bank provided a disclosure that funds deposited into one of its ATMs no later than 10 p.m. on a business day would be made available that day. As it discovered, however, its system requires such deposits to be made no later than 7 p.m. on a business day. The Bank has been manually overriding the system to make funds available in accordance with the disclosure. Now it wants to change to disclosure to correspond to system requirements.

As this change affects the disclosed policy of the Bank, and since the earlier cut-off time will not have the effect of expediting the availability of funds, the Bank must send notice at least 30 days prior to implementing it. As a matter of best practice, the notice should also be posted in a conspicuous place in each location where the Bank’s employees receive deposits to consumer accounts.

This entry was posted on Monday, June 20th, 2016 at 3:00 pm.