Reg CC Updates

We are currently working with our forms vendor to get our terms & conditions updated with multiple changes, including the Reg CC updates. I was just wondering if the Reg CC changes can be implemented prior to July 1, 2020 or do we have to wait to implement them on that date? My thinking is, we will have everything updated and ready to go shortly after the 1st of the year, including training, and was just wondering if we could put the changes in place once everything was done, instead of waiting.

Thanks!

You can always make funds available sooner than the regulation requires so you can make this change anytime you want prior to July 1, 2020.

Thank you Brian!

Brian is correct that you can implement the changes at any time, as they are more favorable to the consumer than the current rules. I had been saying that you might want to hold off a bit to see if anything came from the 2011 proposal prior to the 7/1/19 deadline, but that is seeming less and less likely each day. (In addition, the ABA said in their staff analysis they expect the 2011 proposal/changes to possibly align with the 7/1/25 changes, but who knows.)

Adam, I too was waiting to see if any of the other changes were going to happen along with the 7/1/2020 changes, however, our forms vendor is now wanting us to get these changes started as quickly as possible because they have added other changes to be made at the same time. They have been saying if we don't get things rolling then there will be a chance that they won't get the changes made prior to July. I know they have a lot of customers to get thru this and I am more than happy to get things going and finished! Thanks for your help!

If the Fed and Bureau wait until 2024 to update a regulation that's been out-dated already by over eight years, I'd consider them negligent, perhaps even nonfeasant.

I don't disagree with you, John, but some might argue that eight years already meets that definition, so what's another five?

Of course, we have no way of knowing at this time and I'm interested to see the CFPB's Fall agenda (not yet released as of yesterday) to see if Reg CC shows up on either the pre-rule or proposed-rule stages. Either way, I see it as highly unlikely that a final rule will still be released with an implementation date of 7/1/19. Even if a rule was released today and implementation was optional by 7/1/19 (meaning it was required by a later date), there really isn't time for vendors (and financial institutions) to scramble and get everything listed in the proposal implemented by 7/1/19, meaning that any implementation date will probably be well after 7/1/19 so financial institutions can probably get started on the 7/1/19 changes. At this point, it would be cleaner for them to just wait until after 7/1/19 to implement more changes - but that decision, of course, isn't up to me.

Sure enough, I checked for the CFPB's Fall agenda yesterday morning and it wasn't there. Today it is. Reg CC doesn't show up at all on their list (though the Fed could possibly do something as the CFPB and Fed have joint rulemaking authority of Subpart B).

Is it acceptable if we state in our Funds Availability Policy that we will make the first $300 available instead of the $225 and the same with the $5,525 with a higher number? This is more favorable for the consumer, so I don't see it an issue but wanted to see if anyone had any thoughts on this.

Yes, that would be acceptable. Regulation CC says you must provide AT LEAST $225/$5,525 to the customer. Therefore, amounts greater than this are fine.

I've thought about this and even included this thought in some of the presentations I have done on this topic. However, I have come to the conclusion that a higher amount could cause some logistical problems. Here are some of the pros/cons I have thought of:

Pro: Higher amounts like $300/$6,000 won't require another redisclosure in 5 years (which is most likely going to happen due to inflation).
Con: Eventually, the statutory amounts will exceed your amounts and you will need to update everything. If this is in 15 to 20 years, how likely would your bank be to miss the change since they are not used to updating the thresholds every 5 years? Personally, I like procedures that say "do this every time" rather than "do this sometimes and do this other times" as I've found that consistency helps avoid violations. But hey, you may be retired by the time that happens...
Con: This is going to confuse the heck out of your auditors and examiners.
Con: If you utilize any online training (like ABA Frontline, BOL, ect), they are all going to reference the statutory amounts, which could confuse your staff.
Con: There is speculation that the 2011 proposal may be finalized to align with the 2025 threshold changes. If this does happen, you are going to have to re disclose and retrain anyway. Plus any outside training at that time will reference the statutory amounts, not your custom amounts.

So, it is permitted, but I'm not sure it will be ideal for everyone.

The "Pro" that I would add is that tellers are used to being able to enter hold amounts with easy round number math. Placing a $225 hold on a $717 check means that...uh.... borrow from the 100's column...11 minus 2 is 9....uh....you'll have $492 available on the 2nd business day.

Most banks may have a computer that helps with this, but for those that don't they may opt to "round up" the availability amounts.

One other "con" to balance things out a bit -- Remember that raising those amounts above the regulatory requirement means the bank is taking on incremental bad check risk. Regulators may not be concerned if you increase the $225 amount to $300 since $75 in added losses here and there isn't likely to break the bank. But larger increases from $5525 to perhaps $6000 (a nice round number), might be looked at less favorably from a safety and soundness perspective.

I'd want to have a pretty good risk analysis completed before recommending any large increases over the required amounts.