Interagency Guidance Regarding Deposit Reconciliation Practices

On May 18th, the Banking Brotherhood (Federal Reserve System, CFPB, FDIC, NCUA and OCC) released guidance for institutions regarding deposit reconciliation practices.

If you recall, last year the CFPB, OCC, and FDIC took action against Citizens Bank for failing to credit consumers the full amounts of their deposited funds.  “Citizens Bank regularly denied customers the full credits of their deposits when there were discrepancies between deposit slips and the actual money transferred into the bank,” said CFPB Director Richard Cordray. “The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

Ultimately, this ended up costing Citizens Bank close to $11 million in consumer refunds and $20.5 million in federal penalties, plus additional relief relating to business accounts.

The Agencies expect financial institutions to adopt deposit reconciliation policies and practices that are designed to avoid or reconcile discrepancies, or designed to resolve discrepancies such that customers are not disadvantaged.

Credit unions should review the guidance, and ensure that it has policies and practices that do not violate any of the controlling regulations – Regulation E, Regulation CC, UDAP, and UDAAP.

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