Financial Institutions Will Benefit From Fed’s Final Ruling on Electronic Disclosures
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In November, the Federal Reserve System’s Board of Governors adopted amendments to five consumer financial services and fair lending regulations. The long-awaited final action clarifies the electronic disclosure requirements, which will make it easier for financial institutions to offer this service to their customers and remain in compliance. The final rules went into effect on December 10, 2007.
According to their news release, financial institutions will be required to comply with these regulations on October 1, 2008.
Amended regulations
The amendments were made to the regulations below:
Summary of changes
- Disclosures required to be in writing can be provided electronically if the consumer consents, as outlined in the E-Sign Act.
- If an application is accessed electronically, disclosures required at application (such as under Regulation B and Regulation Z) must be provided electronically, without having to obtain prior consent.
- The requirement to notify customers via email when disclosures (such as statements) are ready to be accessed has been removed.
- The requirement to follow up when an email notice is returned as undeliverable has been removed.
- The requirement to make disclosures accessible for 90 days has been eliminated—since many institutions are making the disclosures available for at least this amount of time already.
Background
In 2001, the Federal Reserve System announced interim final rules for these regulations. The goal was to standardize the delivery of electronic disclosures; however, they never became mandatory. In many ways, they were too burdensome for financial institutions to implement. After much confusion and deliberation, the final rulings come as a relief to the industry.
For more information, contact Nancy Stertz, a financial institutions compliance manager, at 1-888-529-2648 or nstertz@larsonallen.com.
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