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Are there any institutions voluntarily shortening Regulation CC hold times based on the efficiency of the check clearing process? I am assuming there would be no compliance issues with making funds available sooner than permitted by Reg CC, but I am just wondering if anyone is doing this. I realize that in the case of Fraud, you would want the extra days in hopes that it may be spotted by the issuer or issuing bank, but I was just wondering if anyone was doing this from a customer service standpoint.
We recently updated our Regulation CC policy and notice to say same day availability instead of next day availability. During our last exam the examiner remarked that our policy need to match our procedure. For our bank, if you make a deposit today and we do not put a hold on the deposit the funds are available with a debit card that day. I’m not sure if this is what you are asking, but I hope it helps. Also, don’t forget the notice requirements for any Regulation CC changes.
229.18 (e) Changes in policy. A bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank’s availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation.
We are considering shortening the time as well for exception holds. We routinely give same day availability. My issue is that we aren’t usually holding our exception holds for 7 days, but rather 4. I don’t want to change the policy because we want the option to hold to 7 if we need to. I am wondering if we state in our policy that it may be held for up to 7 days if we are okay if we usually only hold 4 for an exception hold, or will the regulator say “our policy doesn’t match our practice.”
Just food for thought! During our last exam the examiner asked front line personnel questions about holds and compared their answers to our Reg CC policy. Our practice was shorter than our policy and it was to the customers benefit but the examiner listed the issue in the report as our practice not matching our policy. Also, we had a fraudulent check returned on the 8th day, within the last six months.
I had a regulator from another region (we are in Chicago) tell me that they would not cite for holding less; however, the regulation clearly says “disclosure must reflect the policy followed by the bank in most cases.” I wonder how specific they are getting in the “followed in most cases” aspect. Because we have “same day availability” in most cases and that is, of course, disclosed. Our policy states funds “generally will be available no later than the seventh business day after the day of your deposit.” I am wondering if that is broad enough to allow an exception “practice” of 4 days with the possibility of 7.
Sec. 229.16 – Specific availability policy disclosure
(a) General. To meet the requirements of a specific availability policy disclosure under Secs. 229.17 and 229.18(d), a bank shall provide a disclosure describing the bank’s policy as to when funds deposited in an account are available for withdrawal. The disclosure must reflect the policy followed by the bank in most cases. A bank may impose longer delays on a case-by-case basis or by invoking one of the exceptions in Sec. 229.l3, provided this is reflected in the disclosure.
We are in the Chicago region too. I agree with your thoughts but make sure using 4 days vs 7 days doesn’t cause a discrimination violation. I would make sure it is clear in your procedures when to use a 4 day hold and when you can extent to a 7 day hold, because if it is open to the employees determination you could unknowingly have a discrimination violation. Just my thoughts!
This conversation keeps getting better and better.
I don’t the risk of discrimination is a big concern. ECOA and the Fair Housing Act deal with lending. Funds availability doesn’t stretch into the lending space.
UDAP could be a concern because the inconsistent treatment might be construed as “unfair.”
Agree. We have already talked about UDAAP. Seven Day hold can only be used on my approval. It would be rare.
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