The Fear of Change: Is Your Credit Union Required to Provide a Change-in-terms Notice? (Part 1)
Written by Alma Calcano, Regulatory Compliance Specialist, NAFCU
NAFCU’s compliance team often receives questions related to regulatory requirements for providing change-in-terms disclosures for different credit union products. This is the first in a series of three blogs to help you understand and navigate the numerous regulations governing change-in-term requirements. In this blog, I will cover several key regulations governing change-in-terms notices for checking and savings accounts. In general, these laws and regulations require a credit union to provide its members with change-in-terms notices before most changes in account terms.
Regulation |
Citation |
Notice Requirement |
Form of the Notice |
Exceptions |
Model Language, Forms & Disclosure Requirements |
Truth in Savings Act |
12 CFR §707.5(a). |
30 calendar days advanced notice for changes in particular terms that are required to be disclosed prior to account opening when those changes would be adverse to the member. Notice must include the effective date of the change. Listed in section 707.4(b), these terms include:
|
Written notice required. |
Changes in the dividend rate and corresponding changes in the APY for variable-rate accounts;
|
Appendix B to Part 707 provides a model clause for change-in-terms notices required under the rule and recommends the use of as simple language as possible to convey the change-in-terms. |
Regulation CC |
12 CFR § 229.18(e). |
At least 30 days before implementing a change to credit union funds availability policies. For changes that result in faster availability for a member than what Regulation CC requires, notice is required no later than 30 days after implementation. |
In any form as long as it is clear and conspicuous. | According to the Commentary in Appendix E, if all new disclosures are provided, the credit union must direct the customer to the changed terms by highlighting the change or using a cover letter or insert. | |
Electronic Fund Transfers Act |
12 CFR § 1005.8(a)(1). |
At least 21 days before the effective date of any change in a term or condition that would result in:
Terms or conditions required to be disclosed can be found in §1005.7(b) and include:
|
Written notice. |
|
According to the Official Staff Interpretation to Regulation E, no specific form or wording is required for the change-in-terms notice. The notice can appear on a periodic statement or may be given by sending a copy of a revised disclosure statement if the change is highlighted. |
The Fear of Change Trilogy
Compilation: Download the full Fear of Change blog series PDF