Answer:
Answer by Lucy Griffin
Management has a good concern but the wrong solution. They can't place an exception hold on any given customer's deposit unless an exception hold reason relates to that customer and that deposit.
Here's what you can do. I generally find that tellers don't place holds because it is difficult. They avoid mistakes by not placing holds. Unfortunately, this opens the bank to losses. The holds that tellers have the most difficulty with are exception holds. Case by case holds (2day local; 5day nonlocal) are much easier and they buy you some time. Nothing in Reg CC says you can't change the hold once it has been placed. Have the tellers place only casebycase holds or increase your basic policy to use the maximum hold. This buys you some time to use a person with more time and experience to consider situations that call for an exception hold and place it correctly.
Answer:
Answer by Ken Golliher
Lucy has given you a tactic that will buy you some time and allow your bank to make considered decisions on individual items.
It is critical that you dissuade management from the plan to impose exception holds on all checks. (There is a reason why they are called "exceptions.")
The financial and regulatory risk an illegal hold represents is compounded by the fact that when you return a check due to an illegal hold, you give your customer a valid claim for "wrongful dishonor" under the uniform commercial code. The check was properly payable and was returned for an unacceptable reason.
Sometimes management can make a wellreasoned decision that financial issues take precedence over compliance issues; i.e. it can knowingly decide to accept the risk of noncompliance. This is not one of those circumstances.
This violation would be obvious, systemic and intentional. It is inevitable that the cost of noncompliance will have to be paid and that it will outweigh the reward.
First published on BankersOnline.com 11/5/01
print
share