I'm trying to figure out whether or not we need to send a Reg. DD subsequent disclosure to our Holiday Club account customers with renewable accounts.
Even though these accounts pay out each year, unless the customer comes in to close the account, the account is "renewed" each year. These accounts are funded via automatic transfers; they are not the coupon booklet deposits.
In the Official Commentary to Section 1030.5 Subsequent Disclosures, it says "Club Accounts. If consumers have agreed to the transfer of payments from another account to a club time account for the next club period, the institution must comply with the requirements for automatically renewable time accounts - even though consumers may withdraw funds from the club account at the end of the current club period".
This leads me to believe that we have to issue a renewal disclosure similar to a CD renewal disclosure. However, Fiserv does not have a renewal disclosure set up for club accounts because club accounts are on the TRAN system and not the TIME system. In addition, in our initial disclosures, we classify club accounts as savings accounts, not time accounts.
Also in the Official Commentary to Section 1030.2 Definitions, it says under Time Accounts: 1. Club Accounts. Although club accounts typically have a maturity date, they are not time accounts unless they also require a penalty of at least seven days' interest for withdrawals during the first six days after the account is opened.
In our case, if the customer closes the account early, they get none of the interest and we have no provision for what happens if they close the account within the first six days of the renewal period.
The only other guidance I've found is from the Consumer Compliance Handbook which says that Time Deposit Accounts include club accounts.
Can anyone give me some guidance here? I'm at a loss as to what to do now. Thanks in advance!
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