It's hard to tell from what you provided, but I think your auditor might be confused because it doesn't look like you are actually using both a large deposit exception hold and a case-by-case hold as John described. In other words, if you are giving $225 immediately and $5,525 next day, you aren't in alignment with what you could do under Reg CC. Now, anything better for the customer than what you could do is fine as Reg CC really just lays out the max of what you can do.
As John said, you could give $225 next day and $5,525 second day if you utilized both a case-by-case hold and a large deposit exception hold. However, it appears to me that you are technically just utilizing the large deposit hold as you are actually giving the $5,525 to the customer on the next day - it doesn't matter that you are giving part of it sooner than next day, i.e. $225 immediately, as the end result is that $5,525 is available to them next day, as is required for the large deposit exception hold without a case-by-case hold. To explain it another way, if you didn't use a case-by-case hold, all you would have to do is make $5,525 available the next day and the remainder would have seventh day availability. (Some financial institutions do this as they have gotten rid of case-by-case holds altogether, just to simplify things.)
Now, all of that said, we have to acknowledge Randy's point that if your policy (disclosure) is more strict that what Reg CC permits (for example, if you require $225 to be immediately available), then you have to follow your policy.
My point here is that what you are doing appears fine (based on what was provided) and doesn't appear to be a violation of Reg CC. If I was your auditor, I would just point this out and comment that it may be worth revisiting your process if your intention was to delay funds for as long as possible, as you are not currently doing that. Alternatively, you could revise your process to simplify it and just remove the $225 requirement as you aren't really using a case-by-case hold. Regardless, what your are doing appears fine under Reg CC if the process is working for you.
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Adam Witmer, CRCM
All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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