I. INTRODUCTION
As the transition from the temporary to the permanent expedited funds availability schedule took effect, we have received many questions in regard to disclosure information to customers. One of the most misunderstood issues of this type of disclosure regulation is the requirement to disclose the availability policy that the bank actually follows in most cases.
As an example Big Red Bank decides it will make all local and non-local checks available for both payment and cash withdrawal on the next business day. However, the bank’s actual practice is to honor deposited funds routinely on a same day basis.
II. THE REGULATION
Section 229.16(a) requires that the bank’s disclosure statement must “reflect the policy followed by the bank in most cases.” The commentary to Regulation CC states that:
“The disclosure provided by a bank must reflect the availability policy followed by the bank in most cases, even though a bank may in some cases make funds available sooner or impose a longer delay.”
When the regulation was out for comment, many requested the Federal Reserve Board (FRB) to adopt a position permitting banks to disclose the maximum delays permitted under the regulation even though they may make funds available earlier. The Federal Reserve Board answered:
The Board did not include this as a disclosure alternative in the final regulation. The Board believes that allowing banks to disclose something other than the policy that the banks actually follow in most cases would be inconsistent with the statutory requirement that banks disclose their “specific policy” as to when deposited funds will be available for withdrawal.
The model forms reflect slight variations from one hold policy to another, thus showing the FRB’s commitment to requiring banks to disclose their specific policies even when those policies are more favorable to the customer than required by regulation. The FRB’s position on this issue appears to reflect a policy that depositors generally should be able to determine from examining their disclosure statements and deposit items what the availability schedule of their deposits will be. Therefore disclosing longer hold periods than a bank routinely or actually imposes would appear to be inconsistent with that goal and the regulation.