Required disclosures for new accounts
by Mary Beth Guard and John Burnett
This is a Regulation D question regarding savings accounts. We are looking at moving the balances of all savings accounts that have ACH debits currently set up, as well as all accounts that have an ATM or debit card, into a separate general ledger and classifying those accounts as "Transaction Accounts" for call report purposes. These accounts would not be closed or transferred to another type of account. This would leave the savings accounts as they are now. This would be an internal move only of the balances to a transaction account that the customer would not be aware of. The accounts would continue to earn interest and the customer would continue to pay the bank's excessive W/D fees. Would this eliminate the necessity to notify customers of limitation requirements on existing accounts? Could this make monitoring of any of the savings accounts possibly unnecessary? Could you continue to pay interest on this type of account? Or would this be considered a total violation of Reg. D?
I viewed a Guru Q and A on the topic of "When to give the Reg E Disclosure," answered by Andy Zavoina. If possible, I would like additional comment on the issue of redisclosing to an existing customer that subsequently requests an access device and/or new EFT service. For example, the customer receives an EFT disclosure at account opening. One year later, the customer requests a debit card. The Commentary [205.7(a)(4)] states that redisclosure is required if the terms and conditions differ from the initial disclosure provided. If the terms and conditions have not changed from the initial disclosure, and the disclosure covered all EFT services offered, does the reg REQUIRE redisclosure? I certainly concur that to redisclose in the above example would be prudent on a riskbased standpoint, but is it required?
Generally, the definition of consumer is someone using an account for "personal, family or household purposes." However, Reg E simply defines a consumer as a "natural person" [205.2(e)]. When dealing with a sole proprietorship account (e.g., "Jane Doe d/b/a Jane's Flowers," or "Jane's Flowers, a Sole Proprietorship," does Reg E cover the account the account is for a business purpose, but considered to be owned by a natural person?
When I was reviewing our new bank disclosure for truth in savings and EFT, I noticed there was a change made on transaction limitations for savings accounts. The disclosure states that only three transactions are allowed instead of the reg's six. Is this considered to still be in compliance since it is less than the reg as long as they allow the six?
When customers pay bills through the bank's web site, a draft is generated to pay the bills. Who has the liability if the account is overdrawn? Would Reg E or EFT rules apply?
I have received several requests from customers to have their periodic statements discontinued, stating, they prefer to view the account online. We do not offer electronic statements for our customers at this time. Can you clarify on demand deposit accounts if a periodic statement is required? I have read under Reg E that a statement is required if an EFT occurs, yet; if an EFT does not occur, is the bank required to send a periodic statement?