Skip to content

Reg E Provisional Credit for Closed Accounts

Answered by: 

Question: 
Reg E Commentary 205.11(a)-4 requires banks to comply with error resolution procedures for claims on closed accounts. However, Reg E does not provide guidance on how to provide provisional credit in such cases and 205.11(c)(2)(i) indicates crediting customer's account. Our thoughts are to credit another account owned solely by the customer and if no such account exists, to ask the customer for direction on providing provisional credit. If a customer requests a check in the amount of the credit, is a bank required to deliver a check since this provisional credit cannot be reversed as provided by 205.11(d)(2) if the claim is denied?
Answer: 

The intent is to give them full use of the funds. I like the idea of crediting it to another account of the same titling or would otherwise reopen the account in question. If you gave them a check, I would have it denoted all over my file as evidence of compliance, I'd follow the check to ensure it was delivered and cashed. It would not look good to have the check in the file returned because of a bad address or some other SNAFU.

As to reversing the provisional credit, you can't do that if they clean out the deposit account. The intent is that they have full use. If they use it, you request it back whether it was a check or an account.

First published on BankersOnline.com 3/02/09

First published on 03/02/2009

Filed under: 
Filed under compliance as: 
Filed under technology as: 

Search Topics