Our bank is thinking of switching the method of paying checks from existng low to high dollar value to the opposite, paying the highest amounts first and then in descending order. Obviously this is a disclosable item and I believe that we need to give at least 30 days advance notice (statement messages and/or stuffers. Anybody have any recent experience with the disclosure requirements necesssary to make this switch. Thanks

I'm not aware of any regulation that makes this a disclosure issue. It's exception item processing, so it impacts only those customers that create an NSF scenario and once that happens the bank can take whatever action that eliminates/reduces the risk - with no prior notice to customers. Just make the change.

Thanks, It is disclosable under NYS banking regulations, and I guess I just figured that somewhere out there in radioland, it was also a federal reg. I'll follow NYS reg which, unfortunately, wants me to disclose etc.

When we changed a couple of years ago, we informed our customer base via a statement message. You have to start about 60 days before the change will be implemented, but there's no additional printing or postage cost. Hope that works with your state law.

We also changed our new account disclosures at about the same time, and informed the customers when the change would take place. There's some discussion on whether or not to disclose that - we felt it was necessary for us.

The UCC allows you to pay items in any order you want. You might just want to amend your contract to say you will pay items in any order allowable under the UCC and leave the ball in your court.

See OCC Interpretive Letter #916 footnote 5. It says Federal Law does not require specific disclosure, but it minimizes customer confusion and helps address assertions that a bank has acted unfairly.

As "Z" indicated, I think many agencies agree that it isn't a requirement, but is a good thing to do. The OCC guidance will tell you that you can pay in any order, but your reasoning shouldn't be to maximize fee income. This tells you that you should justify this. You may have to defend your actions some day.

And from the Texas Dept. of Banking

"Question: Can a bank pay checks that I’ve written in any order it chooses? For example, if several checks are presented for payment in one day, only one of which is more than my balance, can the bank decide to post the larger item first and then the smaller items, even though this would result in more checks not clearing?

Answer: Banks have a right to establish their own policy concerning the order in which they process checks, as stated in the Texas Business & Commerce Code Section 4.303 (b). The Code states that a bank may pay "in any order" and is under no obligation to determine the time of day an item is received. If smaller items are paid first, then there are fewer overdrafts and fewer charges; however, mortgage and rent payments may be returned. Some banks feel that if larger items are paid first, then the most important items are not returned. Payment order should be noted in the deposit contract that customers sign when they open their account."

(Note: the last sentence says "should", not "must".)