In general, new account disclosures may be required when the information being disclosed or the account terms differ from those of the predecessor bank.
Regulation CC Disclosure Requirements
For example, if any of the items required to be disclosed in your funds availability policy differs from the predecessor bank’s policy, we would recommend making new Regulation CC disclosures. See items required to be disclosed in 12 CFR 229.16(b). The staff interpretations specifically state that these disclosures can be made electronically, if you comply with the Electronic Signatures in Global and National Commerce Act (E-SIGN) requirements. Comment 1, Official Staff Commentary, 12 CFR 229.15(a).
Regulation E Disclosure Requirements
You will likely have to make new Regulation E disclosures, which you must provide “before the first electronic fund transfer is made involving the consumer’s account.” 12 CFR 1005.7(a). We believe new notices will be necessary to convey your bank’s contact information for error resolution and stop payments purposes, and some account features may differ from those of the predecessor bank (such as the types of electronic transfers you allow, limitations you impose, fee amounts, etc.). 12 CFR 1005.7(b). On the other hand, if your overdraft payment policies do not differ from the predecessor bank’s policies, it should not be necessary to have customers resign opt-in agreements. See 12 CFR 1005.17. And, you do not have to obtain new authorization for preauthorized transfers. Comment 1, Official Staff Commentary, 12 CFR 1005.10(b) (“A new authorization also is not required when a successor institution begins collecting payments”). These disclosures can be made electronically, if you comply with the Electronic Signatures in Global and National Commerce Act (E-SIGN) requirements. 12 CFR 1005.4(a)(1).
Regulation P Disclosure Requirements
You must provide new privacy disclosures to any individual “who becomes your customer, not later than when you establish a customer relationship.” But, where the new customer relationships are established not “at the customer’s election” (for example, where you acquired a customer’s account from another financial institution), you may deliver the initial privacy notice after establishing the new customer relationships, provided that you send the notice “within a reasonable time.” 12 CFR 1016.4(e)(1)(i); 1016.4(e)(2)(i)(B). These disclosures may be by posting “the notice on the electronic site and require the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular financial product or service.” 12 CFR 1016.9(b)(1)(iii)(A).
Regulation DD Disclosure Requirements
Regulation DD exempts from its notification requirements accounts obtained through an acquisition or merger, but it requires that you provide a change in terms notice if the account terms will change after the acquisition/merger. Comment 2, Official Staff Commentary, 12 CFR 1030.4(a)(1) (“New account disclosures need not be given when an institution acquires an account through an acquisition of or merger with another institution (but see §1030.5(a) of this part regarding advance notice requirements if terms are changed)”). The referenced section requires advance notices of changes in account terms that “may reduce the annual percentage yield or adversely affect the consumer.” 12 CFR 1030.5(a). These disclosures can be made electronically, if you comply with the Electronic Signatures in Global and National Commerce Act (E-SIGN) requirements. 12 CFR 1030.3(a).
As to the application of Regulation DD to the transferred certificate of deposit accounts, we believe that you will have to provide prematurity notices to customers before removing the additional deposit option. Specific rules in Regulation DD address change in terms notices for time accounts that renew automatically and that have a term of one year or less (but more than one month). Those rules authorize two methods of making prematurity change in terms notices: (1) providing new account disclosures and disclosing the maturity date of the existing account or (2) making three specified disclosures (maturity dates for the existing account and the new account, the interest rate and APY (if known), and any differences in terms between the accounts). 12 CFR 1030.5(b)(2). You must send the prematurity change in terms notices at least thirty calendar days before the existing account matures (or, if the account allows a grace period of at least five days, you may send the notices at least twenty calendar days before the end of the grace period). 12 CFR 1030.5(b).
ESIGN Disclosure Requirements
Also, note that the Illinois Financial Institutions Electronic Documents and Digital Signature Act and the federal Electronic Signatures in Global and National Commerce (ESIGN) Act allow banks to send “information relating to a transaction” required by law in electronic form (after sending the required notices and obtaining the consumer’s consent). 205 ILCS 705/10(c)15 USC 7001. The OCC has explained how the E-SIGN requirements apply to financial institutions. OCC Advisory Letter 2004-11. And, the Federal Reserve has published a checklist to ensure compliance with E-SIGN. FRB Consumer Affairs Electronic Banking Checklist (p. 7) (May 2003).