Delayed Funds Availability for New Accounts

Question:

Our institution has a normal availability policy. However, in our "New Account Procedures" we say that we will delay availability for local and nonlocal checks in regard to new account openings. Is this in violation of our normal availability, and should we disclose this to all customers in our Funds Availability Policy?

Answer:

This link will take you to 12 CFR 229.13(a), the portion of Regulation CC that establishes your right to use an exception hold on new accounts. However, Regulation CC only tells you what is possible. In order for you to actually use any hold allowed by the regulation, you must tell the customer it is a possibility.

If your Expedited Funds Availability Act/Regulation CC disclosure does not contain the language on new account holds, you cannot use them. This link will take you to the Appendix which contains the model disclosures. Model form C1 contains an example of the necessary language.

Most banks finalized their Reg CC disclosures in 1988 or 1990. In many cases they have not been read since. Employees have been to training which reviews what the regulation allows, but they do not understand that what they can do is controlled by the terms of their bank's disclosure they have to read it.

First published on BankersOnline.com 10/6/03