02-029
CHAPTER 118
Regulation # 18 - DEPOSIT ACCOUNT DISCLOSURES
SUMMARY: On July 1, 1981, the Bureau of Banking promulgated a
regulation governing deposit account charges. The focus of the
1981 regulation, which became Regulation #18, was advance disclosure
of deposit and share account charges. In 1987, Regulation #18
was revised to incorporate state requirements for disclosing policies
governing funds availability. In 1988, Regulation #18 was once
again amended to recognize the changes that have occurred on the federal
level with respect to funds availability. Federal Reserve Board,
Regulation CC, (12 CFR Part 229 (May 27, 1988)) effective September
1, 19882 was adopted in its entirety to establish uniform time frames
for funds availability with respect to all deposit and shareaccounts
held in financial institutions authorized to do business in Maine.
With the passage of the Truth in Savings Act of 1991 contained in Title
II of the Federal Deposit Insurance Corporation Improvement Act of 1991(12
U.S.C. Section 4301, et. seq. P.L. 102-242, 105 Stat. 2236
(December 19, 1991))("hereinafter the FDICIA") a number of
technical and operational mandates are now prescribed in federal
law. Federal Reserve Board Regulation DD, (12 CFR Part 230 (September
21, 1992)3 is the implementing regulation for financial institutions.
Most recently, the Federal Reserve Board amended Regulation DD, which
repealed the civil liability requirements for failing to comply with
Section 271 of the Truth in Savings Act, effective September 30, 2001(12
U.S.C. 4310 (September 29, 1998)).
Effective January 1, 1995, The National Credit Union Administration
(hereinafter Reg36_Proposed.htmNCUA"), promulgated regulations
to implement the Truth in Savings Act of 1991 contained in the FDICIA
as it applies to credit unions (12 CFR Part 707(September 27, 1993))4.
The regulations (hereinafter cited as NCUA (12 CFR Part 707)) apply
to all credit unions insured by, or eligible to be insured by, the National
Credit Union Share Insurance Fund and set forth disclosure requirements
mandated by Truth in Savings for credit unions. Since its adoption,
NCUA (12 CFR Part 707) has been amended several times. On November 26,
1999, the NCUA Board further amended NCUA (12 CFR Part 707) to repeal
the civil liability requirements for failing to comply with Section
271 of the Truth In Savings Act (12 U.S.C. 4310), effective September
30, 2001 to coincide with Federal Reserve Board Regulation DD, (12 CFR
Part 230).
The amended Regulation #18, which is proposed in this rulemaking, adopts
the provisions of Federal Reserve Board Regulation DD (12 CFR Part 230)
and NCUA (12 CFR Part 707) with respect to disclosure requirements for
consumer accounts and continues the existing disclosure requirements
for other non-consumer accounts by financial institutions and credit
unions.
I. AUTHORITY
Title 9-B MRSA Section 241(1) gives the Superintendent the authority
to promulgate rules defining, limiting, or proscribing acts and practices
which are deemed to be anti-competitive, unfair, deceptive or otherwise
injurious to the public interest.
Title 9-B MRSA Section 241(5) gives the Superintendent the authority
to promulgate rules setting forth time limitations and disclosure
requirements governing funds availability. This subsection also
requires that Maine’s financial institutions make funds, represented
by items deposited into an account, available for withdrawal from
that account within a reasonable time.
Title VI, the Expedited Funds Availability Act, of the Competitive
Equality Banking Act of 1987 (P.L. 100-86) and Federal Reserve Board,
Regulation CC, (12 CFR Part 229) set forth the requirements that financial
institutions and credit unions make funds deposited into transaction
accounts available according to specified time schedules and that
institutions disclose funds availability policies to their customers.
Title II of the FDICIA, the Truth in Savings Act (P.L. 102-242)
Federal Reserve Board, Regulation DD (12 CFR Part 230) and National
Credit Union Administration Board, Truth in Savings (12 CFR Part 707)
set forth the requirements that financial institutions and credit
unions must make clear and uniform disclosure of interest or dividend
rates payable on deposit and share accounts and fees assessable to
such accounts.
II. PURPOSE
This regulation sets forth minimum standards for disclosure of policies
and fees charged account holders of financial institutions and credit
unions in conjunction with the maintenance and operation of deposit
and shareaccounts.
This regulation requires financial institutions and credit unions
to make funds available to their account holderswithin specified time
frames and to disclose their policies on delayed funds availability
to their account holders.
III. DEFINITIONS
- " Account holder" means any person who holds a consumer
account or a non-consumer account as defined by Section III of this
Regulation with a financial institution or credit union.
- "Business day" means a business day as defined by Title
9-B MRSA §145(1)
- "Certificate of Deposit" or "Share Certificate"
means any non-transaction account with a maturity of at least seven
days containing both a promise by the account holder not to make withdrawals
after the account is opened, unless the account is subject to an early
withdrawal penalty, and a promise by the financial institution or
credit union to pay the deposited amount together with interest or
dividends for the stated term. This term excludes "club"
accounts which, by definition, limit withdrawals until a certain number
of periodic deposits have been made during a period of not less than
three months.
- "Consumer account" means a deposit or share account at
a financial institution or credit union that is held by, or offered
to, a natural person who holds an account primarily for personal,
family, or household purposes. The term does not include a natural
person who holds an account for another in a professional capacity
or an account held by an unincorporated non-business association of
natural persons.
- "Credit union" means a credit union authorized to do business
as defined by Title 9-B MRSA §131(12-A).
- "Deposit or share account contract" means the agreement
between a financial institution or credit union and an account holder
that sets forth the terms, conditions, rights, duties, and obligations
relating to a deposit or share account.
- Reg36_Proposed.htmElectronic communication" means a message
transmitted electronically between an account holder and a financial
institution or credit union in a format that allows visual text to
be displayed on equipment such as a personal computer.
- "Financial institution" means a financial institution
authorized to do business as defined in Title 9-B MRSA Section 131(17-A).
- "Non-consumer account" (or business account) means an
account that is not a "consumer account" as defined in Section
III of this Regulation and is classified as a deposit as defined in
Federal Reserve Board, Regulation D, "Reserve Requirements of
Depository Institutions" (12 CFR Part 204) 5
- "Schedule of account charges" means a listing of fees
and charges relating to the maintenance and operation of a consumer
or non-consumer account which may be imposed by the financial institution
or credit union on its account holder for utilizing the deposit or
share-related services of a financial institution or credit union.
It does not include a listing of fees for ancillary services such
as safe deposit boxes, traveler’s checks, night deposit bags,
check printing, fax fees, photocopies or similar charges not directly
related to the maintenance or operation of a consumer or non-consumer
deposit or share account.
IV. PROVISIONS OF THE REGULATION
- Funds Availability Policies and Disclosure
- Funds deposited to any consumer account or non-consumer account
in a financial institution or credit union must be made available
for withdrawal in accordance with Title VI, Expedited Funds Availability
Act (P.L. 100-86) and Federal Reserve Board, Regulation CC (12
CFR Part 229) promulgated thereunder.
- Funds availability policies for transaction accounts as defined
in Federal Reserve Board, Regulation CC (12 CFR Part 229)shall
be disclosed to consumer and non-consumer account holders in a
manner consistent with the provisions of the aforementioned federal
statute and rule. Funds availability policies for non-transaction
accounts shall be disclosed to consumer and non-consumer accountholders
in accordance with the provisions of Paragraph C of this rule.
Notwithstanding the foregoing, a financial institution or credit
union shall not be required to provide funds availability policy
disclosures for either certificates of deposit or share certificates
for the purposes of this regulation.
- General Disclosure Requirements
- No financial institution or credit union shall impose or attempt
to impose any term, condition, duty or obligation other than those
required or permitted by law, federal or state regulation, rule
or order, court order or clearinghouse rule on any account holder,
unless such term, condition, duty or obligation is listed in the
deposit or share account contract governing such account, or supplemented
by a schedule of account charges conveyed to account holders through
notification procedures as provided for in this regulation.
- At the time a consumer or non-consumer account is opened for
any account holder, each financial institution or credit union
shall provide such account holderwith a copy of the deposit or
share account contract and schedule of account charges that govern
such account.
- Each financial institution and credit union shall make the
written disclosures required under this section in
any medium, clearly and conspicuously and in a form the account
holder may keep. When providing written disclosures using
electronic communication, a financial institution shall:
- disclose the requirements for accessing and retaining disclosures
in that format;
- require the account holder to demonstrate the ability to
access the information electronically and affirmatively consent
to electronic delivery of disclosures; and
- provide a description of procedures the account holdermust
use to withdraw consent to electronic delivery of disclosures
and of any conditions, consequences or fees in the event of
such withdrawal of consent.
- No financial institution or credit union shall impose or attempt
to impose any charge, cost or fee on a consumer or non-consumer
account greater than listed in the current schedule of account
charges unless properly disclosed in accordance with this regulation.
- A financial institution or credit union may delete or decrease
any existing consumer or non-consumer deposit or share account
charge without notice. No financial institution or credit
union may impose any new consumer or non-consumer deposit or share
account charge or increase any existing consumer or non-consumer
deposit or share account charge unless a notice reciting such
new or increased charge is provided to the account holdersso affected
by the change in accordance with this regulation.
- At least 30 days prior to implementation of new or increased
consumer or non-consumer deposit and share account service charges,
any disclosures describing the financial institution or credit
union’s consumer or non-consumer account service charges
must be modified to include the new or increased charges.
- A financial institution or credit union shall retain evidence
of compliance with this regulation for a minimum of two years
after the date the disclosures are required to be made or action
is required to be taken or two years after the date of the next
regularly-scheduled compliance examination by the primary regulator
of the financial institution or credit union, whichever is longer.
- Deposit and Share Account Charges – Disclosures by
financial institutions and credit unions.
- Financial institutions and credit unions shall provide notice
of new or increased deposit and share account charges to consumer
account holdersas required in Section IV. B of this regulation,
in accordance with Title II of the Federal Deposit Insurance Corporation
Improvement Act of 1991, the Truth in Savings Act (P.L. 102-242)
and either Federal Reserve Regulation DD (12 CFR Part 230) or
the National Credit Union Administration Board, Truth in Savings
Regulation (12 CFR Part 707), as applicable.
- Financial institutions and credit unions shall provide notice
of new or increased deposit and share account charges for non-consumer
(or business) accounts in the following manner:
- For those account holders who receive periodic statements,
a written notice shall be provided on orwith each statement;
said notice must be mailed at least 30 days in advance of
imposition of such charges. A financial institution or credit
union and an account holder may agree in advance, that the
institution may provide periodic statement disclosures required
by either Federal Reserve Board, Regulation DD (12 CFR Part
230) or the National Credit Union Association Board, Truth
in Savings Regulation (12 CFR Part 707) by electronic communication.
- For those account holders who do not receive periodic statements,
notice shall be provided at least 30 days in advance by:
- conspicuously posting signs in the lobby of each retail
office of the change in the schedule of account charges;
and
- publishing a notice of new or increased charges at
least once for three consecutive weeks in a newspaper
of general circulation in the county(s) where the financial
institution(s) or credit union office(s) is located.
The date of the last publication of this notice may be
no less than 30 days from the date that the new or
increased charges are to be implemented; or
- a financial institution or credit union may use a
direct mailing to notify non-statement account holdersof changes
in account service charges in lieu of the publication requirement.
Any such direct mailing shall be in the manner as prescribed
in Section IV. C (2)(a).
- A financial institution or credit union may elect to provide
disclosure of account charges for non-consumer accounts in the
same manner as prescribed in Section IV. C (1) of this regulation
in lieu of the disclosure requirements prescribed in Section IV.
C (2).
- Complaint Resolution Procedure
The schedule of account charges or other literature that is used
to convey information on fees assessed in conjunction with the operation
of a consumer or non-consumer account shall contain a notice to account
holders regarding the procedure to be followed in resolving disputes.
The following notice contains model language that may be utilized:
"If you have a dispute with your financial institution or credit
union regarding your deposit or share account, you may contact the
financial institution or credit union and attempt to resolve the problem
directly. If the financial institution or credit union fails
to resolve the problem, communicate the problem and the resolution
you are seeking to:
Bureau of Financial Institutions
36 State House Station
Augusta, Maine 04333-0036
To file a complaint electronically, you may contact the Bureau of Financial
Institutions at the following Internet address: http://www.maine.gov/pfr/financialinstitutions/complaint.htm.
The Bureau of Financial Institutions will acknowledge receipt of
your complaint promptly and investigate your claim. You will be informed
of the results of the investigation.
When your complaint involves a federally-chartered financial institution
or credit union, the Bureau of Financial Institutions will refer it
to the appropriate federal supervisory agency and inform you to whom
it has been referred."
Financial institutions that post the model complaint resolution language
on their web sites are encouraged to establish a link to the referenced
URL on the Bureau’s web site.
EFFECTIVE DATE:April 15, 2002
BASIS STATEMENT
- FACTUAL AND POLICY BASIS OF THE REGULATION
On July 1, 1981, the Bureau of Banking promulgated a regulation governing
disclosure of deposit account charges. This rule was last amended
in 1993.
With the passage of amendments to the Truth in Savings Act of 1991
contained in Title II of the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") and Federal Reserve Board,
Regulation DD, a number of technical and operational mandates have
been added to the existing federal law. Moreover, in January 1995,
the National Credit Union Administration ("NCUA") promulgated
regulations to implement the Truth in Savings Act of 1991 contained
in FDICIA as it applies to credit unions.
This Regulation is being promulgated to both include the technical
amendments to the Truth in Savings Act of 1991 and Regulation DD and
to incorporate the regulations promulgated by the NCUA to implement
the Truth in Savings Act as it applies to credit unions.
- RESPONSE TO COMMENTS
Pursuant to the provisions of the Maine Administrative Procedures
Act (5 M.R.S.A. Sec. 8001 through11008, et. seq.), a draft of Chapter
118 (Regulation #18) was promulgated on or about January 16, 2002
and comments were solicited for a period extending until February
15, 2002.
There were two commenters who responded to the proposed rule, Attorney
Gretchen Jones of Skelton, Taintor and Abbott (on behalf of the Maine
Credit Union League) and Robert C. Quentin, Executive Vice President
and Treasurer of Saco and Biddeford Savings Institution.
- Attorney Jones made several stylistic and grammatical recommendations
throughout the regulation. Suggested changes include:
- wherever the regulation uses the term "deposit"
account, the words "and share" should also be included
in order to properly apply the regulation to credit unions;
- edits to language referencing "customer" should
also include "members" as such language is applied
to credit unions;
- a request that the definition of "member" should
be clarified to more accurately reflect that members consist
of "natural persons";
- a request to either clarify or remove language in the definition
of member that contains a reference to existing accounts.
- recommended that the last sentence of Section I of
the Regulation entitled "Authority" be amended to
add the language "or dividend" after the phrase,
"uniform disclosure of interest…" contained
at the end of the paragraph.
- recommended changing the definition of "consumer account"
to delete the references to member contained in the definition
and to delete the word "existing" in the next to the
last line of the definition as being extraneous and unnecessary.
- adding the definition of "account "and "account
holder" to the list of definitions contained in Section
III in order to clarify proposed amendments to the language
contained in Sections IV(B)(2), (3) and (5), Section IV(C)(2)(a),
(b) and (c) where referenced.
The Bureau has revised Regulation 18 in response to these
stylistic and grammatical recommendations offered by Attorney
Jones. The Bureau notes that use of the newly- defined term
" account holder", resulted in the removal of the
proposed definition of "member" as well as various
references to "customer", "depositor" and
"member" throughout the body of the regulation. The
included changes do not, either individually or cumulatively,
substantially alter the scope or impact of Chapter 118 (Regulation
18).
- Attorney Jones recommended that Section I, paragraph 4 be clarified
to include credit unions. Those entities are also subject to Federal
Reserve Board Regulation CC.
The Bureau adopted the recommended change.
- Attorney Jones suggested the definition of "Non-Consumer
Account" should be modified so that it is clear that these
accounts include all accounts that are not consumer accounts and
are also deposits as defined in Federal Reserve Board, Regulation
D.
The Bureau has changed the definition as suggested.
- Attorney Jones recommended that Section IV(A)(2), "Funds
Availability Policies and Disclosure", be amended after the
phrase "transaction accounts" to include a reference to
Regulation CC in order to make it expressly clear that the referenced
accounts are the same "transaction accounts" that are
defined in Regulation CC.
The Bureau has adopted this change.
- Attorney Jones suggests that the regulation should specifically
state that disclosures need only be given to one person in the case
of joint or multiple account holders.
The Bureau recognizes that both Federal Reserve Board, Regulation
CC and Regulation DD discuss the issuance of disclosures to multiple
account holders. Both federal regulations recognize that separate
disclosures to each account holder are unnecessary and, by providing
a disclos\ure to any one of the account holders, satisfies the disclosure
provisions of the federal regulations. The Bureau is aware that
its Regulation 18 is broader in scope than both federal Regulation
CC and DD. Federal Regulation CC requires funds availability disclosures
be provided only to transaction accounts. However, Bureau Regulation
18 applies to both transaction and non-transaction accounts (time
and savings accounts). Federal Regulation DD and NCUA Truth
in Savings both require providing disclosure of account charges
only on consumer accounts, whereas Bureau Regulation 18 requires
a schedule of account charges be provided for both consumer and
non-consumer (business) accounts. However, the methodology
required by the Bureau for the industry to provide disclosures tracks
federal Regulation CC and DD and does not require separate disclosures
to each person in cases of joint or multiple account holders. The
Bureau is not compelled to alter the regulation in response to the
comment of Attorney Jones.
- Attorney Jones also raised several question about the applicability
of Section IV (B)(3) such as:
- When are disclosures as required by the section "related
to a transaction"?;
- When and how must the disclosure of requirements for accessing
and retaining disclosures be given?
- How is a consumer allowed to demonstrate the ability to access
the information?; and
- Are only consumers to be allowed to demonstrate this ability?
In response to these inquiries, the Bureau has amended the
language in Section IV(B)(3) to remove the language "related
to a transaction"; to remove the "timing" reference
as extraneous and to require the account holder to demonstrate
the ability to access disclosure provided via electronic communication.
- Attorney Jones expressed concerns with regard to the record retention
requirements contained in Section IV(B)(7). Because a federally-chartered
institution is not subject to state compliance examination, the
proposed retention schedule could result in a federally-chartered
institution retaining records indefinitely. Attorney Jones recommended
that this provision of the regulation be modified to remove this
ambiguity.
The Bureau agrees and has altered the language to establish
a retention period which may be met by both state and federally-chartered
credit unions.
- Mr. Robert C. Quentin, Executive Vice President and Treasurer
of Saco and Biddeford Savings Institution recommended that the Bureau
allow an exception from the funds availability disclosure policy
requirement for certificates of deposit. Mr. Quentin correctly noted
that Regulation 18 applies to transaction and non-transaction accounts
(time and savings accounts) and thus, applies to certificates of
deposit and share certificates. Mr. Quentin suggested that because
of the nature of certificates of deposit, the issue of funds availability
has very little application. Mr. Quentin suggested that, to require
funds availability disclosures when the account is open, only distracts
the customer’s attention from more meaningful disclosures.
The Bureau agrees that it serves little purpose to require funds
availability policies to be disclosed at the time a certificate
of deposit or share certificate is opened because certificates of
deposit are essentially term contracts that do not permit withdrawals
. To facilitate this exception, the Bureau has added a definition
of "certificate of deposit/share certificate" in Section
III and has excluded certificates of deposit and share certificates
from disclosure requirements under Section IV. A.(2) of the regulation.
However, the definition of certificate of deposit is narrowly defined
and does not include "club" accounts (i.e. Christmas,
Vacation), which, in some instances, are also classified as term
share accounts. Therefore, "club" accounts are not exempt
from the funds availability disclosure policy requirements of this
regulation.
- Mr. Quentin also suggested that the funds availability disclosure
policy include an exception for school savings accounts. Mr. Quentin
stated that these accounts are often opened by children age seven
or younger. The typical account will receive periodic small deposits
with very few, if any, withdrawals. He stated that the financial
institution provides a funds availability policy to the child because
it is required, but providing the disclosure has virtually no practical
application to this type of account.
While the Bureau understands the concerns raised by Mr. Quentin,
the Bureau recognizes that these notices are not only information
for the child/account holder but are also information for the "custodian"
of the child, who may be the person actually conducting the transactions
on behalf of the child/account holder. Disclosure notices for funds
availability policies, in these instances, are more meaningful,
and non-distribution by a financial institution or credit union
may have a negative impact on the account holder and result in unintended
consequences if not part of the initial disclosure package
Copies of 12 CFR Part 229 may be obtained at cost from
the Bureau of Financial Institutions, or from the Federal Reserve Bank
of Boston, 600 Atlantic Avenue, Boston, MA 02106 tel. (617)973-3000.
In addition, a copy may be obtained via the Internet at http://www.federalreserve.gov/Regulations/RegRef.htm#cc
Copies of 12 CFR Part 230 may be obtained at cost from the Bureau
of Financial Institutions, or from the Federal Reserve Bank of Boston,
600 Atlantic Avenue, Boston, MA 02106 tel. (617)973-3000. In addition,
a copy may be obtained via the Internet at http://www.federalreserve.gov/Regulations/RegRef.htm#dd
Copies of 12 CFR Part 707 may be obtained at cost from the Bureau of
Financial Institutions, or from the National Credit Union Administration,
Region I, 9 Washington Square, Washington Avenue Extension, Albany,
NY 12208 tel. (518)862-7400. In addition, a copy may be obtained via
the Internet at http://www.ncua.gov/ref/rules_and_regs/rules_and_regs.html
Copies of 12 CFR Part 204 may be obtained at cost from the Bureau of
Financial Institutions, or from the Federal Reserve Bank of Boston,
600 Atlantic Avenue, Boston, MA 02106 tel. (617)973-3000. In addition,
a copy may be obtained via the Internet at http://www.federalreserve.gov/Regulations/RegRef.htm#d
