1005.14 Electronic fund transfer service provider not holding consumer's account. 1030.1 Authority, purpose, coverage, and effect on state laws. Provide to consumer: Either on a periodic statement or by sending a copy of a revised disclosure statement. Documentation is essential in case auditors, examiners or customers have questions. Institutions must disclose the length of both the interest calculation period and the statement period. General. Regulation DD is a directive set forth by the Federal Reserve, enacted to implement the Truth in Savings Act that was passed in 1991. A financial institution need not give prior notice if an immediate change in terms or conditions is necessary to maintain or restore the security of an account or an electronic fund transfer system. When the initial disclosures omit details about limitations because secrecy is essential to the security of the account or system, a subsequent increase in those limitations need not be disclosed if secrecy is still essential. 1. A financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed under 1005.7 (b) of this part if the change would result in: (i) Increased fees for the consumer; The total number of days in the statement period, or the beginning and ending dates of the period. For accounts with a stated maturity greater than one year that do not compound interest on an annual or more frequent basis, that require interest payouts at least annually, and that disclose an APY determined in accordance with section E of appendix A of this part, a statement that interest cannot remain on deposit and that payout of interest is mandatory. ii. If the change is initiated by the institution, the disclosure requirements of this paragraph apply. Rollover time accounts. Examples of limitations on the number or dollar amount of deposits or withdrawals that institutions must disclose are: i. Additional information that may be given on or with a periodic statement includes: i. Explore guides to help you plan for big financial goals, Supplement I to Part 1030 - Official Interpretations. See interpretation of 4(b)(5) Transaction limitations. 1005.34 Procedures for cancellation and refund of remittance transfers. 4. Fixed-rate accounts. Requirements: The written notice must be mailed or delivered at least 21 calendar days before the effective date for any change in term or condition required to be disclosed under 1005.7 (b) (Content of Initial Disclosures) if the change would result in the following: Increased fees for the consumer Increased liability for the consumer See interpretation of 4(b)(3)(ii) Balance computation method. For example, a statement could disclose a statement period of April 16 through May 15 and further state that the interest earned and the annual percentage yield earned are based on your average daily balance for the period April 1 through April 30.. This resource is not an official legal edition of the Code of Federal Regulations or the Federal Register, and it does not replace the official versions of those publications. A notice must then be sent no later than 30 calendar days after the change is implemented. (i) General. The write notice shall be mailed or provided at least 21 calendar days before the effective date for any change include term instead condition required to be disclosed under 1005.7 (b) (Content of Initial Disclosures) if who replace would result in the following: Increased fees for the consumer Enhanced liability for to consumer (iv) Stricter limitations on the frequency or dollar amount of transfers. Appendix A to Part 1005 Model Disclosure Clauses and Forms, Appendix C to Part 1005 Issuance of Official Interpretations, Comment for 1005.4 General Disclosure Requirements; Jointly Offered Services, Comment for 1005.5 Issuance of Access Devices, Comment for 1005.6 Liability of Consumer for Unauthorized Transfers, Comment for 1005.8 Change-in-Terms Notice; Error Resolution Notice, Comment for 1005.9 Receipts at Electronic Terminals; Periodic Statements, Comment for 1005.10 Preauthorized Transfers, Comment for 1005.11 Procedures for Resolving Errors, Comment for 1005.12 Relation to Other Laws, Comment for 1005.13 Administrative Enforcement; Record Retention, Comment for 1005.14 Electronic Fund Transfer Service Provider Not Holding Consumer's Account, Comment for 1005.15 Electronic Fund Transfer of Government Benefits, Comment for 1005.17 Requirements for Overdraft Services, Comment for 1005.18 Requirements for Financial Institutions Offering Prepaid Accounts, Comment for 1005.19 Internet Posting of Prepaid Account Agreements, Comment for 1005.20 Requirements for Gift Cards and Gift Certificates, Comment for 1005.30 - Remittance Transfer Definitions, Comment for 1005.33 - Procedures for Resolving Errors, Comment for 1005.34 - Procedures for Cancellation and Refund of Remittance Transfers, Comment for 1005.36 - Transfers Scheduled Before the Date of Transfer, Comment for Appendix A - Model Disclosure Clauses and Forms. No notice under this section is required for: (i) Variable-rate changes. (A) The fact that the interest rate and annual percentage yield may change; 1. The early withdrawal penalty may be the least of it. 1. (ii) In providing disclosures upon request, the institution may: (A) Specify an interest rate and annual percentage yield that were offered within the most recent seven calendar days; state that the rate and yield are accurate as of an identified date; and provide a telephone number consumers may call to obtain current rate information. From bankers. Fees for special services, such as stop-payment fees, fees for balance inquiries or verification of deposits, fees associated with checks returned unpaid, and fees for regularly sending to consumers checks that otherwise would be held by the institution. If an institution provides notice through revised account disclosures, the changed term must be highlighted in some manner. (b) Notice before maturity for time accounts longer than one month that renew automatically. Example. Randy, I'm in a similar situation as the OP. Why is the 230.5a (30 days notice for adverse changes for existing accounts) reference there, I did not think you could change any term in a CD until maturity. See interpretation of 6(a)(4) Length of period. Until April 24, 2020, the Federal Reserve's regulation limited the number of withdrawals you could make from a "savings deposit" account, which included both savings accounts and money market. Regulation DD, implemented under the Truth in Savings Act of 1991, for example, only requires financial institutions to give account disclosures to "a consumer," defined as "a natural person who holds an account primarily for personal, family, or household purposes, or to whom such an account is offered," and specifically excluding "a natural pe. Institutions using debit slips may disclose the date the fee was debited on the periodic statement and show the amount and type of fee on the dated debit slip. Recent rates. An institution may, subject to state or other law, provide in its deposit contracts the actions by consumers that will be treated as closing the account and that will result in the forfeiture of accrued but uncredited interest. If a consumer receives a prematurity notice on a one-year time account and requests a rollover to a six-month account, the institution must provide either account opening disclosures including the new maturity date or, if all other terms previously disclosed in the prematurity notice remain the same, only the new maturity date. The FDIC continually reviews the banking practices of all financial institutions under our regulatory authority, including the Bank. (Those having original maturities of greater than one year receive a new initial disclosure, hence they receive notice of all the new instrument's terms.) Certificate of Deposit Account Disclosures | Bankers Online Examples of early withdrawal penalties are: i. 1005.4 General disclosure requirements; jointly offered services. 1. (Paragraph 230.5(a) applies if the change becomes effective prior to the maturity of the existing time account.) The notice may appear on a periodic statement, or may be given by sending a copy of a revised disclosure statement, provided attention is directed to the change (for example, in a cover letter referencing the changed term). in Supplement I. To disclose how the interest rate is determined, institutions must: i. (ii) Check printing fees. Limitations on transfers. Under the alternative timing rule, an institution offering a 10-day grace period would have to provide the disclosures at least 10 days prior to the scheduled maturity date. BankersOnline.com - For bankers. The rest of the regulation was touted as only requiring disclosures. ii. Institutions need not disclose the absence of limitations on rate changes. 1005.18 Requirements for financial institutions offering prepaid accounts. When financial institutions make a change to deposit account terms or conditions, a lot goes into communicating them to customers. Institutions may provide a change-in-term notice on or with a periodic statement or in another mailing. For example, stating one month's interest is permissible, whether the institution assesses 30 days' interest during the month of April, or selects a time period between 28 and 31 days for calculating the interest for all early withdrawals regardless of when the penalty is assessed. 1005.30 Remittance transfer definitions. If a consumer who is not present at the institution makes a request for account disclosures, including a request made by telephone, email, or via the institution's Web site, the institution may send the disclosures in paper form or, if the consumer agrees, may provide the disclosures electronically, such as to an email address that the consumer provides for that purpose, or on the institution's Web site, without regard to the consumer consent or other provisions of the E-Sign Act. Official interpretation of 4Paragraph (a)(2)(ii)(B). 1. 2. General. Penalties imposed by the Internal Revenue Code for certain withdrawals from IRAs or similar pension or savings plans are not early withdrawal penalties for purposes of this part. 4. (b) Notice before maturity for time accounts longer than one month that renew automatically. (See appendix B, B-7 - Sample Form.) in Supplement I. Ten business days is a reasonable time for responding to requests for account information that consumers do not make in person, including requests made by electronic means (such as by electronic mail). In itemizing fees imposed more than once in the period, institutions may group fees if they are the same type. The termination of employment for consumers for whom account maintenance or activity fees were waived during their employment by the depository institution. No specific form or wording is required for a change-in-terms notice. The notice shall state that consumers may request account disclosures containing terms, fees, and rate information for their account. If a depository institution mails or delivers a periodic statement, the statement shall include the following disclosures: 1. However, now you have shaken my faith. The Bureau launched this resource to provide an easier-to-navigate electronic format for many of its Regulations. Naming and describing the fee (such as $4.00 monthly service fee) will typically satisfy these requirements. Depository institutions shall provide a notice to consumers who receive periodic statements and who hold existing accounts of the type offered by the institution on June 21, 1993. The disclosures shall be mailed or delivered at least 30 calendar days before maturity of the existing account. A response to an oral inquiry (by telephone or in person) about rates and yields or fees does not trigger the duty to provide account disclosures. The Fear of Change: Is Your Credit Union Required to - Homepage | NAFCU in Supplement I. 2023 Operations Compliance Triage Conference, 2023 Lending Compliance Triage Conference, 2023 BSA/AML Top Gun Conference ON-DEMAND, Specially Designated Nationals List (SDN). When an institution provides regular quarterly statements, and in addition provides a monthly interim statement to comply with Regulation E, the interim statement need not comply with this section unless it states interest or rate information. 3. Statement details must enable consumers to identify the specific fee. days' advance written notice of decreases in the . In addition to the interest rate and annual percentage yield, institutions may disclose a periodic rate corresponding to the interest rate. See interpretation of 8(a) Change-in-Terms Notice in Supplement I. Official interpretation of 4(b)(1)(ii) Variable rates. If consumers have agreed to the transfer of payments from another account to a club time account for the next club period, the institution must comply with the requirements for automatically renewable time accounts--even though consumers may withdraw funds from the club account at the end of the current club period. The amount or type of any bonus, when the bonus will be provided, and any minimum balance and time requirements to obtain the bonus. (2) Prior notice exception. If the account will not renew automatically, a statement of whether interest will be paid after maturity if the consumer does not renew the account must be stated. Generally, Regulation DDs 230.5 addresses subsequent disclosures. See interpretation of 6(a) General rule. Requirements: The written notice must be mailed or delivered at least 30 calendar days before implementing any change in the availability policy. 1. (i) Frequency. In the case of a change in terms that becomes effective if a rollover time account is subsequently renewed: i. 2. (i) A depository institution shall provide account disclosures to a consumer upon request. Official interpretation of 4(b)(6)(ii) Early withdrawal penalties. A notice is not required for an increase in fees for printing checks (or deposit and withdrawal slips) even if the institution adds some amount to the price charged by the vendor. If applicable, the total overdraft and returned item fees required to be disclosed by 1030.11(a). Change in telephone number or address. Provide to consumer: May be given to the consumer in any form as long as it is clear and conspicuous. Alternatively, the disclosures may be mailed or delivered at least 20 calendar days before the end of the grace period on the existing account, provided a grace period of at least five calendar days is allowed. (ii) Early withdrawal penalties. The dollar amount of interest earned during the statement period. But when consumers ask for written information about an account (whether by telephone, in person, or by other means), the institution must provide disclosures unless the account is no longer offered to the public. Electronic Code of Federal Regulations (e-CFR), CHAPTER XCONSUMER FINANCIAL PROTECTION BUREAU, PART 1030TRUTH IN SAVINGS (REGULATION DD). Institutions may provide a change-in-term notice on or with a periodic statement or in another mailing. If compounding occurs during the term and interest may be withdrawn prior to maturity, a statement that the annual percentage yield assumes interest remains on deposit until maturity and that a withdrawal will reduce earnings. At the time of its birth, Regulation DD was described as having only one substantive provision, the requirement that the balance on which interest was paid be based on one of two acceptable methods. Appendix A to Part 1030 Annual Percentage Yield Calculation, Appendix B to Part 1030 Model Clauses and Sample Forms, Appendix C to Part 1030 Effect on State Laws, Appendix D to Part 1030 Issuance of Official Interpretations, Comment for 1030.1 Authority, purpose, coverage, and effect on state laws, Comment for 1030.3 - General Disclosure Requirements, Comment for 1030.5 - Subsequent Disclosures, Comment for 1030.6 - Periodic Statement Disclosures, Comment for 1030.9 - Enforcement and Record Retention, Comment for 1030.11 - Additional Disclosures Regarding the Payment of Overdrafts, Comment for Appendix A to Part 1030 - Annual Percentage Yield Calculation, Comment for Appendix B to Part 1030 - Model Clauses and Sample Forms. (a) Change in terms. in Supplement I. If a consumer who is not present at the institution uses electronic means (for example, an Internet Web site) to open an account or request a service, the disclosures required under paragraph (a)(1) of this section must be provided before the account is opened or the service is provided. The availability or terms of, or a deposit in, a new account; and 12 CFR 1030.5 - LII / Legal Information Institute If a bank can change a rate or an early withdrawal penalty on a time deposit, then there is very little argument that Regulation DD maintains its status as a shopping regulation, one which allows the consumer to make informed choices between alternatives. 1. Nonrollover time accounts. 5. (2) Maturities of one year or less but longer than one month. For example, if an institution ties the fees payable on a NOW account to balances held in the NOW account and a savings account, the NOW account disclosures must state that fact and explain how the fee is determined. Can you explain more why the change may not be beneficial? However, Section(b) specifically deals with maturity notices on time deposits. For faster and more reliable delivery, add compliance@smslp.com to your trusted senders list in your email software. An institution reserving the right to change rates at its discretion must state the fact that rates may change at any time. In disclosing interest earned for the period, institutions must use the term interest or terminology such as: i. Questions: Per Regulation DD, if the change is beneficial to the customer, like removing a fee, does this require any notification to the customer. See interpretation of 4Paragraph (a)(2)(ii)(A). in Supplement I. Monthly statements and quarterly compounding. The particular product is a split tier interest product where you earn the following (for example): Maybe - but since it is a variable rate account, what is beneficial today may not be tomorrow. If the interest rate and annual percentage yield that will be paid for the new account are unknown when disclosures are provided, the institution shall state that those rates have not yet been determined, the date when they will be determined, and a telephone number consumers may call to obtain the interest rate and the annual percentage yield that will be paid for the new account. Official interpretation of 4(b)(1)(i) Annual percentage yield and interest rate. Quick Links Search FAQs from the Hotline Call the Compliance Hotline Even to the eye of the nonbeliever, the language is pretty clear Regulation DD does contemplate the possibility that the bank could unilaterally change terms during the life of the instrument. Limits on the number of checks that may be written on an account within a given time period. in Supplement I. Effective Date: 12/30/2011 Comments Close: Notice before maturity for time accounts longer than one year that do not renew automatically. 1030.6 Periodic statement disclosures. The following are types of fees that must be disclosed: i. Official interpretation of 4Paragraph (b)(1)(ii)(B). Regulation CC and its Effect on Mobile Deposits - Checks For Less If the notice is provided through revised account disclosures, the changed term must be highlighted in some manner, such as notating that a particular fee has been changed and specifying the new amount or using an accompanying letter that refers to the changed term. Advertisers and sponsors are not responsible for site content. Fees for overdrawing an account. . There is an exception if you don't know the interest rate and APY at the time of the notice. Other fees. Comments must be received on or before February 21, 2012. (2) Amount of interest. Examples. in Supplement I. Every notification needs to meet regulatory requirements so you will want to review the rules to determine type, content and timing of the notification. in Supplement I, See interpretation of 4(b)(3) Balance information. What Is Regulation D - Forbes Advisor First published on BankersOnline.com 9/15/03. Closing some of an institution's ATMs; 3. Comment for 1030.5 - Consumer Financial Protection Bureau (See appendix A, Part I, Paragraph C.), See interpretation of 4(b)(1)(i) Annual percentage yield and interest rate. Form of notice. 1005.13 Administrative enforcement; record retention. Institutions must state the amount of interest that accrued during the statement period, even if it was not credited. (3) Fees imposed. Deposit change in terms: Do I need to let the customer know? | Wipfli If the interest rate and annual percentage yield that will be paid for the new account are unknown when disclosures are provided, the institution shall state that those rates have not yet been determined, the date when they will be determined, and a telephone number consumers may call to obtain the interest rate and the annual percentage yield that will be paid for the new account. For other fixed-rate accounts, institutions may use a date (This rate will be in effect through May 4, 1995) or a period (This rate will be in effect for at least 30 days). (3) Obtain the annual percentage yield disclosed. (iv) Stricter limitations on the frequency or dollar amount of transfers. A depository institution shall give advance notice to affected consumers of any change in a term required to be disclosed under Sec. Form of notice. Increase in fees. The notice requirement is applicable to consumer accounts only; however, the institution may opt to send the notice to all customers affected by the change. A financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed under 1005.7 (b) of this part if the change would result in: (i) Increased fees for the consumer;