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News Now

Washington
CUNA seeks credit union check collection comments
WASHINGTON (4/19/11)--The Credit Union National Association (CUNA) has encouraged credit unions to comment on a Federal Reserve proposed rule that would amend its Regulation CC to increase next business day availability, and encourage electronic check processing and returns. The Fed proposal, which is part of the Dodd-Frank Act, will force credit unions and other financial institutions to increase to $200 the amount of deposited funds that will be made available for next business day availability. Credit unions will need to make this change by July 21. Under the proposal, a credit union or another depositary institution (the first institution to which a check is transferred) would be entitled to an expeditious check return only if it agrees to receive returned checks electronically. CUNA has also noted that the Fed would only entitle credit unions or another depositary institutions (the first institution to which a check is transferred) to an expeditious check return if it agrees to receive returned checks electronically. The Fed proposal would also shorten the reasonable additional hold extension from 5 to 2 business days for most checks and would apply check collection and return provisions, including warranties, to electronically-created items. The proposal removes all references to "nonlocal" checks and requires updates of model disclosure forms. However, credit unions using current model forms would be granted a 12 month safe harbor. CUNA in the comment call asks credit unions how various deposit- and return-related risks can be decreased. Credit unions may also comment on conversion costs, compliance costs, and other costs related to accepting electronic check returns. The Fed has also asked credit unions whether they charge back a customer’s account for returned checks. Comments are due to CUNA by May 20. Comments solicited by the Fed should be submitted by June 3. For the full comment call, use the resource link.


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