Are we required to send "short form" hold notices when we delay funds within the normal availability schedule, or just when we invoke an exception hold?

If your normal availabiity policy is to delay availability according to the regulatory limitations (up to 2 business days local check; up to 5 days for a nonlocal check), you only need to provide a hold notice if you invoke an exception hold (229.13 hold). The hold notice for the exception hold would have to conform to the requirements of 229.13(g), including the account number, date of deposit, amount subject to hold, reason the exception was invoked, and the time period within which the held funds will be availability.

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Opinions expressed are not necessarily those of my employer.

Paul Brinker CRCM
Director, Corporate Compliance
First National Bank of Omaha
402-964-8313

The answer depends on what you disclosed to your customers in your funds availability policy. If your policy matches that of models C-1 or C-2 in Appendix C of Reg CC (whoa, that's a lot of C's), then you can't delay on normal availability schedule anyway. If your policy matches that of model C-3, the answer to your question is "Yes, you do need to provide a notice of hold when applying the normal availability schedule limits." If you read the second paragraph of the section of Model C-3 headed Longer Delays May Apply, you will see that it says "we will notify you at the time you make your deposit". If your policy matches C-4 or C-5, the answer to your question is "No. You've already told the customers what to expect with their deposited items." Remember, though, your actions must match your chosen policy. You can't just use policy statement C-4 to avoid case-by-case hold notices if you don't, in fact, hold all deposited checks.

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Jim Bedsole, CRCM, CBA, CFSA

Opinions expressed are my own, and do not necessarily reflect those of my employer.

And that's why our Hold Notice is designed for "Case-by-Case" holds AND Exception holds. Yes, the form is long - but in the long run, its easier to understand for BOTH the customer and the teller!

Also - we don't run the risk of someone pulling out the wrong hold notice!

Bonnie - we also have one notice for both case by case and exception holds. However, we are finding that our tellers don't seem to find it that easy in determining when to use the exception reasons. We find that they use them when they are doing case by case. I realize that this is a training issue and we considered using a separate form for case by case just to avoid the confusion. Any suggestions on how to make this easier to understand without having to have another form? Thanks.

Angela, e-mail me at mizrahib@partnershipbanking.com and I can send you a sample of what our notice looks like.

Basically, the form spells out all of the Exceptions as well as the case-by-case.

Have we eliminated all confusion? Well no, but I think we've eliminateda about 95% of the confusion.

Just a thought, we recently went through a FDIC Compliance Exam. The examiners really scrutinized the exception holds we had placed on checks. The examiner In Charge suggested that banks should use case-by-case when possinle and avoid exception holds because of the added scrutiny they will incur.

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Jeff

We have had a few strings on examiners and thier (incorrect) thoughts on Reg. CC. I disagree Jeff. I would normally use exception holds and in a few instances when I don't have some strong reason (but I don't feel good about the check) I use a Case-by-Case hold.

Both are allowed by law, so why would the examimer make this comment? What added scrutiny does an exception hold get?

Jeff,
I would also add the comment that the examiner has probably never been on the Safety and Soundness side of the exam! I actually heard from an examiner that, in his opinion, the safety and soundness of the bank has priority over Reg CC.

So the question is - who do you wish to please? The Safety and Soundness team that can issue a C & D if you are experiencing too many losses from check fraud - or the Compliance team that is taking too narrow and literal an interpretation, or even an completely incorrect interpretion of a regulation?

Sometimes I wish that SS and Compliance would occur at the same time so we could get BOTH teams in the same room to talk about issues facing the bank!!!

It's not whom you wish to please, but rather what is best for the bank while attempting to comply. Reg CC is touchy because it can hamstring you if you accept a check you don't feel good about. The operative word in this case is "accept". If you don't feel good about it, why accept it? Accepting it then leaves you at the mercy of Reg CC limitations, especially considering numerous money orders and cashier's checks being stolen and negotiated across the country. We tell our tellers constantly that if you don't feel good about the check, talk to supervision/management; call the drawee bank; don't accept it, etc.; but do something besides relying on hold placement because it won't necessarily prevent a loss.

We generally use the case by case holds and upon occasion the exception holds. The examiners will scrutinize the exception holds because a number of banks have been using invalid reasons for placing the exception hold. As has been previously stated, this is a consumer protection issue. If CC was designed to protect banks, the standard availability schedule would be tailored to suit the average routing and clearing times, especially for banks that don't use direct presentment.

[This message has been edited by De Vonne (edited 06-01-2001).]