The Federal Reserve Board (FRB) and CFPB jointly announced proposed amendments to Regulation CC on November 20, 2018. In other words, FRB and CFPB are planning to make necessary changes to Regulation CC, which implement the Expedited Funds Availability Act (EFA Act), with an intention to make it more effective.

Back in 2011, the Board had proposed certain amendments to Regulation CC, to streamline the payment process and to make it extensively electronic; however, those amendments never came into effect.

So, apart from amending Regulation CC, the Board and the Bureau (Agencies) are also reopening the comment period for amendments proposed in 2011.

Since the Board and the Bureau believe that there may have been significant shifts in markets, implementation of technology, or industry practices, they are reopening the comment period for the 2011 Proposal. It will give them fresh ideas that will help them amend the proposal to make it relevant to today’s time.

The new proposal aims to implement a statutory requirement to adjust the dollar amounts in the EFA Act.

According to Federal Reserve “In the 2018 Proposal, the Agencies are proposing a calculation methodology for implementing a statutory requirement to adjust the dollar amounts in the EFA Act every five years by the aggregate annual percentage increase in the Consumer Price Index for Wage Earners and Clerical Workers (CPIW) rounded to the nearest multiple of $25.”

Earlier this year, FRB also approved amendments to Regulation CC’s liability provisions, which incorporates provisions that stay within the FRB’s rulemaking authority.

The new proposal also attempts to implement Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) amendments
to the EFA Act.

Once it comes into effect, it will extend coverage to:

  • American Samoa
  • The Commonwealth of the Northern Mariana Islands, and
  • Guam.

The banks in these jurisdictions will have to consider the EFA Act’s requirements when it comes to funds availability, payment of interest, and disclosures. The proposed EGRRCPA amendments would handle these jurisdictions as individual states for implementing Regulation CC.

Apart from that, the new proposal also seeks to implement several other technical changes to Regulation CC. For example; it would explain in the regulation that both the Federal Reserve and CFPB are subject to the joint rulemaking authority under certain provisions of the EFA Act.

To allow institutions to implement the changes effectively; the agencies recommend a compliance date that would be a year after the publication of a final rule. This decision will give that much-needed confidence to the institutions working toward implementing changes based on the new proposal.

The 2018 proposal is expected to bring significant changes in the way financial institutions function. Once the proposed amendments come into effect, it will streamline the way banks operate. Besides, the proposed amendments will also offer tremendous benefits to customers.

In today’s complex business environments, it’s not that easy for financial institutions to thrive. For long-term success, it’s essential that they comply with relevant regulations and have the right policies and procedures in place.

Article Supplied By Accume Partners