Answer:
For case by case holds, the notice must be provided at the time of the hold. If not provided at the time of deposit, it must be sent by the next banking day following deposit. For exception holds, if the notice is not given at the time of the deposit, the bank must mail or deliver the notice to the customer as soon as practicable, but no later than the first business day following the day the facts leading to the exception hold become known to the bank, or the deposit is made, whichever is later.
The problem with not giving out the hold notice at the time of the deposit is that customers then have a reasonable expectation when they leave the teller line that their funds will be available next business day. They may not learn of the hold for several days after (allowing time for mail delivery). By that time they may have written several checks that are attempting to clear and bouncing or creating overdrafts and fees that you may find yourself liable for refunding. At a minimum, you are going to increase customer service problems as the tradeoff for more accurate notices.
I think it is a better use of resources to:
- Redesign your hold forms to make sure they are as easy to use as possible;
- Train the tellers in the proper decisioning process in placing holds and the proper completion of the form, including giving them appropriate tools to make this more effective; and
- Set up a backroom quality control function that assesses the accuracy of the notices and holds, sends corrected notices when applicable, and provides information to management about error trends so that appropriate remedial training or corrective action can be taken.
First published on BankersOnline.com 9/04/06
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