TISA / NCUA – Under TISA and the NCUA’s regulation, what types of changes require a change in terms notice?

Compliance > Regulation DD - TISA
Q:  Under TISA and the NCUA’s regulation, what types of changes require a change in terms notice?
 
A:     A change in terms notice is required to be provided to affected members of any change in a term required to be disclosed under 707.4(b) (i.e. the account disclosures) if the change may:
  • Reduce the APY, or
  • Adversely affect the member.
     
     
However, the Regulation (707.5) specifically outlines that no change in terms notice is required for:
  • Variable rate changes – changes in the dividend rate and corresponding changes in the APY in variable-rate accounts
  • Share draft and check printing fees – changes in fees for check printing.
  • Short-term term share accounts – changes in any term for term share accounts with maturities of one month or less.
     
     
The Official Interpretations for 707.5 also contains this further clarification regarding changes that occur upon an event that is already disclosed:
 
Appendix C to Part 707—Official Staff Interpretations
Section 707.5—Subsequent Disclosures
(a) Change in Terms
3. Terms that change upon the occurrence of an event. A credit union offering terms that will automatically change upon the occurrence of a stated event need not send an advance notice of the change provided the credit union fully describes the conditions of the change in the account opening disclosures (and sends any change-in-term notices regardless of whether the changed term affects that member's account at that time).
4. Examples. Examples of changes not requiring an advance change-in-terms notice are:
i. The termination of employment for employee-members for whom account maintenance or activity fees were waived during their employment by the credit union.
ii. The expiration of one year in a promotion described in the account opening disclosures to “waive $4.00 monthly service charges for one year”.
 
 
 
ADDITIONAL INFORMATION
 
 

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