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#1116879 - 01/25/09 04:28 PM Reg CC Disclosure vs Policy
Compliance504 Offline
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Tennessee
I have come across a couple of older posts regarding funds availability disclosures vs policy and request some confimation to help explain Reg interpretations to Mgmt.

Post #631526 by John Burnett and Post #455852 by Ken Pegasus both state something to the effect that a bank's policy must reflect what the bank does more than half the time. I can not find where the Reg or Staff Commentary actually defines most of the time as more than half the time. While I agree that sounds reasonable, I can't support that exact statement by the Reg. Am I missing something?

Also Post #425185 by Ken Pegasus...this post addresses a practice at our bank.

Our bank does disclose we WILL hold checks for new accounts when in reality we place checks on hold case-by case. I would prefer that we dislcose "we may hold checks up to eleven business days" as this is our practice. However, in the above referenced post Ken states that you will have to give a hold notice every time. Again, I agree with this statement as it sounds reasonable but this would be a hard sell to Mgmt as I can't prove it by what the Reg states. When it comes to hold notices for exceptions, 229.13(g)clearly omits (a)New Accounts and so does the Staff Commentary. It also is not listed as an exception option on the model disclosure C-12.

In relation to New Accounts-Are we truly in violation if we state "will hold" and do not always hold? Would we truly be in violation if we state "may hold" and do not give a notice?

I'm new at having to explain a position to Mgmt and any help would be appreciated.

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#1117198 - 01/26/09 05:58 PM Re: Reg CC Disclosure vs Policy Compliance504
BrendaC Offline
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BrendaC
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Sweet Home AL
From Reg CC Commentary:

"Section 229.16 Specific Availability Policy Disclosure
A. 229.16(a) General
1. This section describes the information that must be disclosed by banks to comply with 229.17 and 229.18(d), which require that banks furnish notices of their specific policy regarding availability of deposited funds. The disclosure provided by a bank must reflect the availability policy followed by the bank in most cases, even though a bank may in some cases make funds available sooner or impose a longer delay."

With regard to your new account notice, I would use "may" instead of "will" if you do not routinely apply the new account hold.
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#1117275 - 01/26/09 07:07 PM Re: Reg CC Disclosure vs Policy BrendaC
Compliance504 Offline
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Posts: 694
Tennessee
Thanks for the response, Brenda.

I see the Reg is very clear about "most of the time" I was wondering how "most of the time" = more than half the time. Is that just a standard best practice...I'm probably nit picking but I'm trying to learn how far I need to read into these Regs.

Also, I agree with you that we should disclose "may". What are you're thoughts on providing a notice if we do?

Thanks, again!

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#1117289 - 01/26/09 07:17 PM Re: Reg CC Disclosure vs Policy Compliance504
rlcarey Online
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Galveston, TX
It is not required whether you invoke the new account exception all the time or on an occassional basis:

226.13(g) Notice of exception--(1) In general. Subject to paragraphs (g)(2) and (g)(3) of this section, when a depositary bank extends the time when funds will be available for withdrawal based on the application of an exception contained in paragraphs (b) through (f) of this section, it must provide the depositor with a written notice.

The new account exception is 226.13(a).
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#1117290 - 01/26/09 07:17 PM Re: Reg CC Disclosure vs Policy Compliance504
Milby Offline
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Posts: 953
Tejas
Originally Posted By: Compliance504
I was wondering how "most of the time" = more than half the time.
I'm not sure how "most" could be construed as anything else. If you do something 49% of the time, you are doing something else most of the time.

We provide notice on every availability hold that is extended beyond the norm (for us the norm is next day). It's really not hard if your system has the ability to print the notice automatically, which ours does.

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#1117310 - 01/26/09 07:32 PM Re: Reg CC Disclosure vs Policy Milby
Compliance504 Offline
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Joined: Dec 2008
Posts: 694
Tennessee
Thanks rl and Milby...

I agree with rl that we would not have to give a notice. I couldn't find anything to support it in the Reg. When I came across the older post, which I understood to say we would need to give a notice, I thought I better check it out.

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