Compliance Blog

Blog Home
May 25, 2010
Categories: Consumer Lending

The Periodic Statement Requirement that Isn't

Written by Steve Van Beek

With all the confusion regarding the July 1, 2010 Reg Z requirements, there is bound to be some issues that seem to creep up late and present a mountainous climb toward compliance.  Well, here is one issue that is floating out there that you might be able to take off your checklist.

Some credit unions are reporting that their processors are requiring them to reorder their combined periodic statements to comply with the new Reg Z rules.  I had not heard of this requirement, so I asked for a citation (which can also help when talking with auditors or examiners).  The one I was given was 226.7(b)(13):

"(13) Format requirements. The due date required by paragraph (b)(11) of this section shall be disclosed on the front of the first page of the periodic statement. The amount of the late payment fee and the annual percentage rate(s) required by paragraph (b)(11) of this section shall be stated in close proximity to the due date. The ending balance required by paragraph (b)(10) of this section and the disclosures required by paragraph (b)(12) of this section shall be disclosed closely proximate to the minimum payment due. The due date, late payment fee and annual percentage rate, ending balance, minimum payment due, and disclosures required by paragraph (b)(12) of this section shall be grouped together. Sample G–18(D) in Appendix G to this part sets forth an example of how these terms may be grouped."  (emphasis added).

The staff commentary goes on to say that - for combined statements - the "first page of the periodic statement" is the first page where credit transactions appear:

"7(b)(13) Format requirements.
1. Combined deposit account and credit account statements. Some financial institutions provide information about deposit account and open-end credit account activity on one periodic statement. For purposes of providing disclosures on the front of the first page of the periodic statement pursuant to §226.7(b)(13), the first page of such a combined statement shall be the page on which credit transactions first appear."

But before you rush to reorganize our periodic statements, take a look at the requirement.  "
The due date required by paragraph (b)(11) of this section shall be disclosed on the front of the first page of the periodic statement."  Ok, naturally the inclination is to look to 226.7(b)(11) to see what needs to disclosed:

"(11) Due date; late payment costs. (i) Except as provided in paragraph (b)(11)(ii) of this section and in accordance with the format requirements in paragraph (b)(13) of this section, for a credit card account under an open-end (not home-secured) consumer credit plan, a card issuer must provide on each periodic statement:
(A) The due date for a payment. The due date disclosed pursuant to this paragraph shall be the same day of the month for each billing cycle.
(B) The amount of any late payment fee and any increased periodic rate(s) (expressed as an annual percentage rate(s)) that may be imposed on the account as a result of a late payment. If a range of late payment fees may be assessed, the card issuer may state the range of fees, or the highest fee and at the issuer's option with the highest fee an indication that the fee imposed could be lower. If the rate may be increased for more than one feature or balance, the card issuer may state the range of rates or the highest rate that could apply and at the issuer's option an indication that the rate imposed could be lower."  (emphasis added).
The requirement in 226.7(b)(11) only applies to credit card accounts.  And, most credit unions provide their credit card statements separately from other open-end loans (which might be combined with share accounts).  A review of this chart the Federal Reserve included in the final regulations implementing the Credit CARD Act confirms that 226.7(b)(11) is limited to credit card accounts.  Therefore, the requirement to have the due date on the first page of the periodic statement is limited to credit card accounts as well.  If a credit union has separate statements for credit cards, the credit union would not be required to reorganize the loans on its statements. 

Categories