There is talk of a new Nacha rule coming down the pipeline that would make RDFIs responsible for credits that they post before settlement date. For banks who post credits early, this looks like it could increase your credit risk. Are you planning to continue offering early credits if this rule passes?

It is a request for Information and is not at the proposal stage to amend the Nacha Rules.

https://www.nacha.org/rules/risks-early-funds-availability

I realize that, but our RPA feels as though this will become a rule. I'm asking IF it does, what are banks who post credits early going to do, if anything.

Are there any banks out there posting credits before settlement date now? If so, and IF a new rule is passed that makes RDFI responsible for these credits, how do you think this will affect you? Will you continue to post credits early? We get a lot of reversals and I'm concerned this will increase our credit risk substantially. Maybe I'm overthinking this... Thoughts?

If your bank isn't posting credits early, a new rule allowing ODFIs to reverse them before the settlement date shouldn't affect you. I do know of one FCU in my area that advertises early posting as a member benefit.

Thanks John,

The POTENTIAL rule would make RDFIs responsible for the credit if they posted it early. Currently, if ODFI sends a reversal, the RDFI can return it for NSF, even it if was posted before settlement date. IF this RFI results in a new potential rule and the rule passes, the RDFI would not be able to return reversals for NSF if they posted the credit early. We currently post on settlement date, BUT are looking at the option to post credits up to 2 days early. I don't want to start posting early, only to find out this could end up being a huge risk and have to go back to posting on settlement date. I don't think our customers would appreciate that. I'm just trying to get some feedback.

To me, the risk for posting ACH credits early is really no greater than accepting deposits over the counter and giving them immediate or next day credit. Those deposited items could come back just as easily and create an NSF situation a day or two later. ACH credits such as payroll probably even create less of an issue. How many ACH credit reversals do you even receive? They are likely few and far between?

You are making an assumption about a rule that hasn't yet been proposed. You're right that that is what COULD happen, and I suspect you could be right in your assumption, since Nacha's rulemaking body wants to get feedback before they consider a proposal.

I think that any bank contemplating providing early access ought to think long and hard about, specifically for the reason you mentioned, reknab. I imagine the germ of the idea might have come from all the press about banks and credit unions that provided early access to EIP ACH credits. Some bankers and depositors may not have ever realized that early access might be available, but for that press coverage (based, I suspect on IRS announcements of the weekly batches of payments, mentioning that some banks may have allowed early access).

The unknown in this discussion is the wording of any proposed and final rule. It's difficult to make an informed risk estimate without that information.

But Randy's point, just above (which he managed to sneak in ahead of me as I was pondering my response) is well taken.

You will also want to watch for any signs that Same-Day ACH Credits are growing as a percentage of the credits you are receiving. They need to be made available sooner than the routine credit that may have a day or two before the Settlement Date. But I can't imagine they would be subject to any proposed rule allowing reversals before Settlement Date.

I was surprised at the number of reversals we receive, and the total dollar amount YTD was very high, so it is a concern.

thank you for your response.

I strongly urge any RDFI that is concerned about this to read THIS and submit a comment to Nacha's request for information.

I personally don't see Nacha creating a Rule forbidding RDFI's from making funds available prior to Settlement Date. From discussions I've had there are strong arguments (and emotions) on each side but not enough to make Nacha create a new Rule. I personally think offering early access to credits is a marketing gimmick, it's irresponsible and it's unnecessary. After all, only the first deposit is made available "early". After that, in the case of payroll, the payroll is paid on the same timeframe (weekly, monthly, etc.).
If I were an ODFI, or an Originator who didn't want a certain set of my employees boasting about "getting paid early", I'd just send my payroll ACH Files as Same Day. Files This would prevent RDFI's from offering "early access" since they would not receive the File until the Settlement Date (not to mention this would greatly reduce credit risk to the ODFI).

I have just been notified that Mgmt has made the decision to start doing this....offer consumers access to funds from an ACH credit before settlement.....

I am only concerned about any regulatory compliance risks and requirements with doing this.....

From a regulatory compliance perspective, what do we need to consider and do?

Any information that anyone can share would be greatly appreciated...

you can always give your customers access to their funds sooner, it is only when you delay access that you have regulatory or compliance concerns. for this, there are no current regulatory ramifications. but, as noted above, Nacha is exploring a rule regarding assessing liability on RDFIs who choose to provide early access when a reversal is sent and funds aren't available. based on how Nacha works, that is likely 2-3 years from reality.