On May 13 the Consumer Financial Protection Bureau (CFPB) issued pandemic related information including a Statement on Supervisory and Enforcement Practices Regarding Regulation Z, FAQs on Open-End (not Home Secured) Rules Related to COVID-19, and FAQs on Payment and Deposit Rules Related to COVID-19. A summary of the Payment and Deposit Rules FAQs, which includes three main questions, is provided below.
FAQ one addresses whether a financial or depository institution can change account terms for consumer checking, savings, or prepaid accounts due to the pandemic. The answer indicates institutions may change account terms so long as they provide appropriate notice to consumers. The CFPB states changes favorable to the consumer can be implemented immediately without advance notice. The CFPB also notes:
- Regulations E and DD provide a process under which institutions may change account terms that are required to be disclosed to consumers (e.g. ATM fees or overdraft fees).
- For some types of changes, Regulation E requires an FI to provide the consumer with at least 21 days’ notice before implementing the change, and Regulation DD requires a DI to provide the consumer with at least 30 days’ notice.
- The notice should clearly state the effective date of the change.
FAQ two discusses whether an institution can immediately change account terms for consumer checking, savings, or prepaid accounts to provide relief. The CFPB’s answer is that institutions may immediately make changes to account terms that are favorable for the consumer. The CFPB reminds institutions of the following:
- Regulations E and DD allow for the provision of immediate relief to consumers by changing account terms without advance notice where the change in terms is clearly favorable to the consumer.
- Under Regulation E, an institution need not provide advance notice of a change in account terms if it chooses to decrease a fee, but the CFPB advises to clearly notify consumers of the change as soon as reasonably practicable.
- Regulation DD only requires advance notice of changes in account terms that “may reduce the annual percentage yield or adversely affect the consumer.” Examples provided by the CFPB include reducing or eliminate monthly maintenance fees or eliminating transfer fees on savings accounts without providing advance notice. If institutions later choose to again raise or reimplement these fees, advance notice would be required.
FAQ three addresses whether there are other means for checking, savings, or prepaid account providers to provide consumers with immediate relief. The CFPA says institutions may choose to assist consumers by other means, such as using discretion to waive or reduce fees on a case-by-case basis, without changing overall account terms as long as it is done in accordance with law. This may be done when consumers contact the institution or institutions may implement waivers without solicitation to expedite service and facilitate consumer access. The CFPB reminds institution of their obligation to honor stop payment requests from consumers relating to preauthorized transfers (e.g. recurring bills or expenses), as consumers facing financial difficulties may need to reprioritize their payments.
Would you like to discuss pandemic issues with other bankers? Compliance Resource offers a Pandemic Forum for posting questions and sharing information.