Although there have been few new or changed regulations related to Deposit Compliance, missteps in compliance with these regulations can cause consumer harm.
It’s important to stay focused and make sure staff changes or the implementation of new systems don’t increase errors at your institution.
Helping institutions identify errors in deposit operations is a routine part of our work. Here are the top five mistakes we’ve seen during our deposit reviews/audits.
- Regulation CC (Availability of funds) – The institution initiated a hold because it couldn’t verify funds; however, failed to document its attempts to verify funds. A similar finding has been placing an exception hold based on reasonable cause without documenting the reasonable cause or disclosing that cause to the customer.
Recommendation: Be sure your procedures include documenting your efforts to verify funds, and hold notices include the reason for the hold.
- Regulation DD/Truth in Savings – On CDs with maturities over 12 months, the institution did not include the required Truth in Savings (TISA) information as required by Regulation DD.
Recommendation: For most institutions, this requires a manual process. Be sure your workflow includes providing a new copy of the TISA Disclosure that is provided at account opening, along with the Maturity Notice.
- Regulation DD/Truth in Savings – TISA Disclosures did not include the required information.
- Tier accounts lacked the Annual Percentage Yield for each Tier.
- The interest compounding method was missing.
Recommendation: If the institution is using a deposit origination system, make sure all items are completed and filled in – especially if there has been a system update. Some institutions utilize in-house or fill-in forms. In all cases, it’s important to remind all new accounts staff of the importance of ensuring all disclosure fields are completed when opening new accounts.
- Regulation E (Electronic Funds Transfer) –
- Provisional credit wasn’t provided in a timely manner.
- The customer was not notified about the final credit within the required time frame.
Recommendation: Remember, timing is everything! Be sure procedures address the timing requirements for providing both provisional and final credit along with any required notifications, and that files contain documentation to support the investigation.
- Rate Sheets – Rate sheets meant for internal use only are provided to consumers. When this happens, the required disclosures under Regulation DD are not provided.
Recommendation: Be sure all relevant staff members know the required disclosures when advertising interest rates and account terms. Rate sheets should include clear and conspicuous text indicating “For Internal Use Only.” Also, ensure staff understands rate sheets should be available to institution staff only. It may also be easier (if trigger terms are present) to just include the required disclosures in the event information is inadvertently provided.
TCA provides A Better Way to help you navigate and understand these errors. Contact us at (800) 934-7347 or [email protected] if you have any questions!
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