Changing for the better

Before we all enjoy the genius combination of flavorful bubbly root beer and classic vanilla ice cream, let’s talk about change in terms notices. Better yet, let’s talk about when we do cool things for our members that don’t trigger an advanced change-in-terms notice!

A few years ago, the compliance team published a series of blogs to help our compliance friends understand and navigate the numerous regulations governing change-in-term requirements. This master chart covers several key regulations governing change-in-terms notices for checking, savings, and credit accounts. There are certain account changes that trigger the requirements to send advanced notice, such as increased fees or interest rates. However, sometimes we receive questions about what to do when a credit union is making a change that might help the member, like lowering or eliminating fees or expanding options for members. This blog will cover a few common scenarios for changing terms in a way that may be beneficial to members.

Lowering and eliminating share account fees. Credit unions sometimes lower fees associated with share checking and savings accounts and wonder whether notice is required. Section 707.5(a) of NCUA’s Truth in Savings regulation requires advanced notice to be sent for changes that “may reduce the annual percentage yield (APY) or adversely affect the member.” However, no notice is required for a reduction in APY associated with a variable-rate account. The rule does not mention a notice requirement for changes that would be beneficial to members, like elimination of a fee, and therefore it will be up to the credit union to determine whether to send advance notice and when that notice would be sent.

 

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