One of the side effects of the COVID-19 pandemic has been the need for many consumers to access money set aside in their savings accounts, which has caused me some heartburn. However, on April 24, 2020, the Federal Reserve made a refreshing announcement about an interim final rule and a request for comment on Regulation D: Reserve Requirements of Depository Institutions. This announcement by the Federal Reserve will help alleviate some concerns by account holders and their financial institutions when it comes to withdrawing money from a “savings account.”
The Board amended Regulation D, effective April 24, 2020, to delete the six-transfer limit from the “savings deposit” definition. This interim final rule includes deletion of the provisions in the “savings deposit” definition that require depository institutions either to prevent transfers and withdrawals in excess of the limit or to monitor savings deposits after the transactions post for violations of the limit. The interim final rule also makes conforming changes to other definitions in Regulation D that refer to “savings deposit” as necessary.
As an interim final rule with a request for comment associated with the announcement, the Board has made these changes effective immediately but could make additional changes as needed based on the public comment later.
What do these changes mean to your financial institution? As a financial institution, you MAY remove the restrictions to the number of transactions allowed on a “savings account,” either permanently or temporarily. Since this is a positive impact for the consumers, a notice of the change is highly recommended by the Board if your institution decides to remove the transaction restrictions for a limited time. The accounts do not need to be reclassified within your systems and reporting on the FR 2900 reports could remain as they do today. The regulation is silent as to whether a financial institution could charge for transactions over a prescribed number, but institutions should be clear to disclose if those fees may apply.
Some decisions need to be made as to how to handle these changes, how to inform the account holders, any system changes that may need to be made and what processes or procedures will need to be adapted to enable the change.
A link to the full the announcement and request for comment can be found on the Federal Reserve website. The Board has also released a Frequently Asked Questions page on their website which may be enhanced with additional industry questions. |
