With the industry getting more technology-friendly, the government has proposed allowing banks to make funds-availability disclosures to customers electronically.
The Federal Reserve Board may allow bankers to electronically inform customers how long a check's funds will be held. This could be done by fax or by electronic mail; however, a paper copy must be provided if the customer requests it.
Bankers and consultants cheered the plan, saying it shows the regulator has an eye on the future, where an increasing amount of transactions will be handled through the Internet or other systems.
"Anything that gives bankers other avenues to inform people about these disclosures will be helpful," said Bruce Brett, senior vice president at Signet Bank in Richmond, Va., and a member of the American Bankers Association's check-fraud task force. "It's more in step with the way banks do business these days."
"They're trying to make the reg tailored to what's going on in the industry," agreed Diane M. Casey, national director of financial institutions regulatory issues at Grant Thornton in Washington. "So many banks are using (computer technology) to give financial services, that it makes sense to allow disclosures to be made in this way."
The May 8 proposal is expected to be published in the Federal Register soon, with comments due in about two months.
The Fed also is proposing to change hold notices on deposits that include more than one check. Currently, banks must disclose the amount of each check being held as well as the total being deposited. Under the proposed rule, banks must disclose only the amount of the checks being held.
Other parts of the hold notice wouldn't change. Banks still would have to include the customer's account number, the date of the deposit, how long the check is to be held, and why the delay was needed.
The proposal also allows banks more time to provide check-hold notices in an emergency, such as an earthquake, flood, or computer-system crash. Now, banks must mail notices within one business day of the problem.
After the 1994 earthquake in California, some bankers called the current rule impractical, a Fed official said. The proposal calls for banks to send the notices in "a reasonable time" but gives no specific timetable.