As you are aware, the Federal Reserve is continuing to restructure their check-processing operations. On Monday, the Fed released their most recent change - to the Fourth District - effective October 18, 2008. When the Fed's restructurings are complete, there will only be four remaining check-processing offices: Atlanta, Cleveland, Dallas, and Philadelphia. The result is checks that were considered non-local will become local checks.
If you have a delayed funds availability policy, you will need to change your policy when the restructurings affect your credit union. The list of completed changes, including effective dates, are here on the Fed's website. When does your funds availability policy need to be updated? The answer is found Reg CC:
" (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." 12 C.F.R. 229.18(e).
The Fed's changes to Appendix A will expedite the availability of member's funds because more checks will be considered local. Thus, a notice would need to be sent no later than 30 days after the effective date of your credit union's policy change. The Commentary to Reg CC also indicates the need to highlight the changes in your policy if you decide to issue a new funds availability policy to your members.
"E. 229.18(e) Changes in Policy
1. This paragraph requires banks to send notices to their customers when the banks change their availability policies with regard to consumer accounts. A notice may be given in any form as long as it is clear and conspicuous. If the bank gives notice of a change by sending the customer a complete new availability disclosure, the bank must direct the customer to the changed terms in the disclosure by use of a letter or insert, or by highlighting the changed terms in the disclosure.
2. Generally, a bank must send a notice at least 30 calendar days before implementing any change in its availability policy. If the change results in faster availability of deposits—for example, if the bank changes its availability for nonlocal checks from the fifth business day after deposit to the fourth business day after deposit—the bank need not send advance notice. The bank must, however, send notice of the change no later than 30 calendar days after the change is implemented. A bank is not required to give a notice when there is a change in Appendix B (reduction of schedules for certain nonlocal checks)." Commentary to 12 C.F.R. 229.18(e). Emphasis Added.
There may be multiple changes that affect your credit union, so you may want to consider complying early to incorporate all the changes in a single amendment to your policy. Another option - consider whether converting to a case-by-case hold policy is appropriate for your credit union given the changes to Reg CC.
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I will have the pleasure of moderating
NAFCU's September webcast on Remote Deposit Capture. The webcast features Ed McLaughlin, Executive Director and Editor of RemoteDepositCapture.com, who will analyze the remote deposit capture industry and the benefits and risks associated with utilizing this new technology.
If you are looking for detailed background information on the remote deposit capture industry, Southwest Corporate Federal Credit Union recently released a White Paper. Southwest Corporate's
press release has information on how to obtain the free White Paper.
Both the webcast and the White Paper could be useful in your strategic growth and long-term planning.
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