Regulation CC Changes are Coming!

Amy Donaghue

By: Karen Sylvester, AAP, CAMS, CRCM, NCP, Director, Compliance Education

On June 24, 2019, the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve jointly released amendments to Regulation CC that implement a statutory requirement to adjust the funds availability amount made available to customers. This amendment to Regulation CC Subpart B will impact all financial institutions as of July 1, 2020.

The CFPB and the Federal Reserve issued a Request for Comment (RFC) in December of 2018, asking for industry feedback on how the organizations calculated Funds Availability going forward. In the initial RFC, the Consumer Price Index for Urban Wage Earners and Clerical Works (CPI-W) was used to determine the rate of inflation over a five-year period. That average was then used to determine the subsequent Funds Availability rates.These rates would either remain the same or increase in increments of $25 for the next rolling five years.

The final rule released the following changes, which will go into effect on July 1, 2020:

  • 229.10 (c) Minimum amount of deposited funds currently set at $200 will move to $225
  • 229.12 (d) Permissive Adjustment to funds availability will change from $400 to $450.
  • 229.13 (a) “New Account”, large deposit, and exception holds for next day availability will change from $5,000 to $5,525

The Civil liability under section 229.21 for any financial institution failing to comply with any requirement under subpart B will also be changing depending on the severity of the infraction. This liability currently set at $100, $1,000 and $500,000 will change to $100, $1,100 and $552,500.

Commentary was included in the final rules emphasizing financial institutions will need to provide information to account holders of these changes at least 30 days prior to the change. The agencies felt that by giving a one-year notice of the change should provide financial institutions ample time to prepare and provide the information either as a new Expedited Funds Availability (EFA) or a reference to the institution’s current EFA. The information could be in written format or in another manner compliant with the E-Sign Act.

Included in these final rules were some corrections, updates and clarifications to Regulation DD (Truth in Savings). Amongst these changes included how the Annual Percentage Yield should be calculated by a financial institution. The CFBP provided different scenarios to enhance understanding of these updates.