Annual Sweep Disclosure required by 360.8(e)

Are insured depository institutions still required to send the annual disclosure required by 360.8(e) to sweep account customers?

(e) Disclosure requirements. Beginning July 1, 2009, in all new sweep account contracts, in renewals of existing sweep account contracts and within sixty days after July 1, 2009, and no less than annually thereafter, institutions must prominently disclose in writing to sweep account customers whether their swept funds are deposits within the meaning of 12 U.S.C. 1813(l). If the funds are not deposits, the institution must further disclose the status such funds would have if the institution failed—for example, general creditor status or secured creditor status. Such disclosures must be consistent with how the institution reports such funds on its quarterly Consolidated Reports of Condition and Income or Thrift Financial Reports. The disclosure requirements imposed under this provision do not apply to sweep accounts where: The transfers are within a single account, or a sub-account; or the sweep account involves only deposit-to-deposit sweeps, such as zero-balance accounts, unless the sweep results in a change in the customer's insurance coverage.

There's been no change to that requirement.

If this mechanism was implemented in order to provide interest bearing accounts to customers ineligible for NOW accounts, consider whether the complexity could be avoided in favor of opening an interest bearing DDA for the customers involved.

It's your friend travelgirl again John and Ken.

I'm not finding anything to the contrary out there. Is the provision to provide annual notices to covered sweep accounts (loan, repos, Fed, etc.) still in effect? I believe it is.

Another peer says no. I think there was confusion between the two sections issued in 2009. Only the unlimited insurance piece under 330.16(c)(3) went away in late 2012 but the requirement to provide annual notices under 360.8(e) is still effective.

Thoughts?

My thoughts? You are correct. Your peer is mistaken. But I encourage you to review Ken's post directly above your latest.

Thanks John!