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Truth in Savings Act (NCUA Rules & Regulations Part 707)

Overview

Part 707 of the NCUA Rules and Regulations implements the Truth in Savings Act of 1991 (TISA), contained in the Federal Deposit Insurance Corporation Improvement Act of 1991, 12 U.S.C. 4301, et seq. NCUA’s regulation (12 CFR Part 707) became effective in 1993 and should not be confused with Regulation DD. Regulation DD is a Consumer Financial Protection Bureau regulation that implements TISA for all depository institutions, except credit unions, that offer deposit accounts to residents of any state. However, it is important to note Congress mandated that NCUA’s regulation be “substantially similar” to Regulation DD.

The purpose of Part 707 is to enable credit union members and potential members to make informed decisions about accounts at credit unions. Part 707 requires credit unions to provide disclosures so that members and potential members can make meaningful comparisons among credit unions and depository institutions. The disclosure requirements are intended to inform consumers about the fees, annual percentage yield, interest rate, and other terms for deposit accounts. Those include disclosures when an account is opened, upon request, when account terms are changed, when periodic statements are required, and when term share accounts mature. Part 707 also includes disclosure requirements concerning advertising, record retention, dividend payments, and overdraft protection practices.

Full text of TISA can be found here. NCUA’s Truth in Savings regulation can be found here.

Associated Risks

Compliance risk can occur when the credit union fails to implement the necessary controls to comply with Part 707.

Transaction risk can occur when the credit union does not have adequate internal controls in place and as a result suffers a loss.

Reputation risk can occur when the credit union incurs fines and penalties or receives decreased member confidence as a result of failure to comply with Part 707.

Strategic risk can occur when the board of directors fails to perform necessary due diligence in reviewing existing and prospective products and services for compliance with Part 707.

Examination Objectives

Determine whether the credit union complies with all required provisions of Part 707, such as:

  • Providing all required account disclosures to members and potential members within the required time frames and ensuring that account disclosures reflect the terms of the legal obligation between the parties;
  • Accurately disclosing all required information on periodic statements for covered accounts;
  • Using a permissible method for paying dividends, and accurately applying other calculations (e.g., daily balance, average daily balance, minimum balance, etc.);
  • Ensuring advertisements include all required information and are not misleading or inaccurate (credit unions should maintain an advertising file containing copies of the credit union’s advertisements); and
  • Maintaining evidence of compliance (for a period of two years) with all provisions of Part 707.

Examination Procedures

  1. Review the credit union's TISA policies and procedures.
  2. Determine the credit union has a detailed disclosure as required.
  3. Determine the credit union accurately calculates the APY, dividends, and APYE.
  4. Determine whether the credit union provides initial disclosures as required.
  5. Determine whether the credit union appropriately discloses the annual percentage yield and the dividend rate.
  6. Determine procedures are in place for staff to accurately respond to oral account inquiries.
  7. Determine whether the credit union notifies members of any adverse changes at least 30 days before the change.
  8. Determine whether periodic statements include clear and conspicuous disclosure of:
    1. APYE;
    2. Amount of dividends earned;
    3. Amount and type of fees imposed; and
    4. Time frame of the reporting period.
  9. Determine whether the share account advertisements, announcements, internet web pages, or other solicitations avoid misleading or inaccurate representations of share account terms.

TRUTH IN SAVINGS ACT (TISA)
(NCUA RULES AND REGULATIONS PART 707)
CHECKLIST

TRUTH IN SAVINGS ACT (TISA) (NCUA RULES AND REGULATIONS PART 707) CHECKLIST
Item Description YES NO N/A
Item
1
Description
Does the credit union make the required disclosures clearly and conspicuously in writing and in a form the member may keep? (§ 707.3(a))
YES
 
NO
 
N/A
 
Item
1(a)
Description
If the disclosures required by the regulation are combined with the credit union’s other accounts, is it clear which disclosures are applicable to the member’s account? (§ 707.3(a))
YES
 
NO
 
N/A
 
Item
2
Description
Do the disclosures reflect the terms of the legal obligation between the member and the credit union? (§ 707.3(b))
YES
 
NO
 
N/A
 
Item
3
Description
When orally responding to a member’s inquiry about dividend rates, does the credit union state the annual percentage yield? (§ 707.3(e)).
YES
 
NO
 
N/A
 
Item
4
Description
Are all annual percentage yields accurate to within .05% above or below the annual percentage yield determined in accordance with Appendix A of the regulation? (§ 707.3(f)(2))
YES
 
NO
 
N/A
 

Account Disclosures (§707.4)

Account Disclosures (§707.4)
Item Description YES NO N/A
Item
5
Description
Does the credit union provide initial disclosures before an account is opened or a service is provided, whichever is earlier? (§ 707.4(a)(1))
YES
 
NO
 
N/A
 
Item
5(a)
Description
If the member is not present, does the credit union mail or deliver the disclosures no later than 10 business days after the account is opened or a service is provided? (§ 707.4(a)(1))
YES
 
NO
 
N/A
 
Item
6
Description
Does the credit union provide account disclosures to members upon request? (§ 707.4(a)(2)(i))
YES
 
NO
 
N/A
 
Item
6(a)
Description
If the member’s request is not made in person, does the credit union mail or deliver the account disclosures within a reasonable time after it receives the request? (§ 707.4(a)(2)(i))
YES
 
NO
 
N/A
 
Item
6(b)
Description
In providing disclosures upon request, does the credit union:
YES
N/A
NO
N/A
N/A
N/A
Item
6(b)(i)
Description
Specify an interest rate and APY that were offered within the most recent seven calendar days?
YES
 
NO
 
N/A
 
Item
6(b)(ii)
Description
State that the rate and yield are accurate as of an identified date?
YES
 
NO
 
N/A
 
Item
6(b)(iii)
Description
Provide a telephone number members may call to obtain current rate information? (§ 707.4(a)(2)(ii)(A))
YES
 
NO
 
N/A
 
Item
7
Description
Do account disclosures include the following rate information (as applicable): (§ 707.4(b)(1)(i))
YES
N/A
NO
N/A
N/A
N/A
Item
7(a)
Description
The “annual percentage yield” and “interest rate,” using those terms?
YES
 
NO
 
N/A
 
Item
7(b)
Description
The period of time the interest rate will be in effect for fixed-rate accounts?
YES
 
NO
 
N/A
 
Item
8
Description
Do disclosures for variable-rate accounts include the following: (§ 707.4(b)(1)(ii))
YES
N/A
NO
N/A
N/A
N/A
Item
8(a)
Description
The fact that the interest rate and APY may change?
YES
 
NO
 
N/A
 
Item
8(b)
Description
How the interest rate is determined?
YES
 
NO
 
N/A
 
Item
8(c)
Description
The frequency with which the interest rate may change?
YES
 
NO
 
N/A
 
Item
8(d)
Description
Any limitation on the amount the interest rate may change?
YES
 
NO
 
N/A
 
Item
9
Description
Do the account disclosures describe the frequency with which interest is compounded and credited?
YES
 
NO
 
N/A
 
Item
10
Description
Do the account disclosures include a statement that interest will not be paid if members close an account before accrued interest is credited? (§ 707.4(b)(2)(ii))
YES
 
NO
 
N/A
 
Item
11
Description
Do the account disclosures describe the minimum balance requirements necessary to open an account, avoid the imposition of a fee, or obtain the APY disclosed?
YES
 
NO
 
N/A
 
Item
11(a)
Description
Do the account disclosures state how the minimum balance requirement is determined for these purposes (except for the balance to open the account)? (§ 707.4(b)(3)(i))
YES
 
NO
 
N/A
 
Item
12
Description
Do the account disclosures include an explanation of the balance computation method used to calculate interest on the account? (§ 707.4(b)(3)(ii))
YES
 
NO
 
N/A
 
Item
13
Description
Do the account disclosures state when dividends begins to accrue on non-cash deposits? (§ 707.4(b)(3)(iii))
YES
 
NO
 
N/A
 
Item
14
Description
Do the account disclosures disclose the amount of any fee that may be imposed in connection with the account (or how the fee will be determined) and the conditions under which the fee may be imposed? (§ 707.4(b)(4))
YES
 
NO
 
N/A
 
Item
15
Description
Do the account disclosures disclose all limitations on the number or dollar amount of withdrawals or deposits? (§ 707.4(b)(5))
YES
 
NO
 
N/A
 
Item
16
Description
For time accounts, do the account disclosures include the following:
YES
N/A
NO
N/A
N/A
N/A
Item
16(a)
Description
The maturity date? (§ 707.4(b)(6)(i))
YES
 
NO
 
N/A
 
Item
16(b)
Description
Early withdrawal penalties? (§ 707.4(b)(6)(ii))
YES
 
NO
 
N/A
 
Item
16(c)
Description
If compounding occurs and dividends may be withdrawn during the term, a statement that the APY assumes dividends remains on deposit and that a withdrawal will reduce earnings? (§ 707.4(b)(6)(iii))
YES
 
NO
 
N/A
 
Item
16(d)
Description
Information regarding renewal policies (§ 707.4(b)(6)(iv))
YES
 
NO
 
N/A
 
Item
16(d)(i)
Description
Whether the account will renew automatically?
YES
 
NO
 
N/A
 
Item
16(d)(ii)
Description
If it renews automatically, if a grace period exists and the length?
YES
 
NO
 
N/A
 
Item
16(d)(iii)
Description
If not renewed automatically, whether dividends will be paid after maturity?
YES
 
NO
 
N/A
 
Item
17
Description
Do account disclosures state the amount or type of bonus and the conditions under which the bonus will be paid? (§ 707.4(b)(7))
YES
 
NO
 
N/A
 
Item
18
Description
Was the notice of availability of disclosures to existing account holders included on or with the first periodic statement sent beginning on or after January 1, 1995 (or first periodic statement for a statement cycle beginning on or after that date)? (§ 707.4(c))
YES
 
NO
 
N/A
 

Subsequent Disclosures (§707.5)

Subsequent Disclosures (§707.5)
Item Description YES NO N/A
Item
19
Description
Does the credit union provide advance notification to depositors of any change in a term required to be disclosed under §707.4
YES
 
NO
 
N/A
 
Item
19(a)
Description
If the change may reduce the APY or adversely affect the member does the notice include the effective date of the change?
YES
 
NO
 
N/A
 
Item
19(b)
Description
Is the notice mailed or delivered at least 30 days before the effective date of the change? (§ 707.5(a)(1)).
YES
 
NO
 
N/A
 
Item
20
Description
If notice is not provided, does one of the following exceptions to the notice requirement apply:
YES
N/A
NO
N/A
N/A
N/A
Item
20(a)
Description
Variable-rate changes? (§ 707.5(a)(2)(i))
YES
 
NO
 
N/A
 
Item
20(b)
Description
Check printing fees? (§ 707.5(a)(2)(ii))
YES
 
NO
 
N/A
 
Item
20(c)
Description
Short-term time accounts (one month or less)? (§ 707.5(a)(2)(iii))
YES
 
NO
 
N/A
 
Item
21
Description
Are the proper subsequent disclosures provided for the following time accounts:
YES
N/A
NO
N/A
N/A
N/A
Item
21(a)
Description
Renew automatically with maturities longer than one year? (§ 707.5(b)(1))
YES
 
NO
 
N/A
 
Item
21(b)
Description
Renew automatically with maturities one year or less but longer than one month? (§ 707.5(b)(2))
YES
 
NO
 
N/A
 
Item
21(c)
Description
Renew automatically with maturities one month or less? (§ 707.5(a)(2)(iii))
YES
 
NO
 
N/A
 
Item
21(d)
Description
Do not renew automatically with maturities longer than one year?
YES
 
NO
 
N/A
 

Periodic Statement Disclosures (§707.6)

Periodic Statement Disclosures (§707.6)
Item Description YES NO N/A
Item
22
Description
Is the annual percentage yield earned, using that term, disclosed on the periodic statement?
YES
 
NO
 
N/A
 
Item
22(a)
Description
Is the APY earned calculated in accordance with Appendix A? (§ 707.6(b)(1))
YES
 
NO
 
N/A
 
Item
23
Description
Is the amount of dividends earned during the statement period accurately disclosed? (§ 707.6(b)(2))
YES
 
NO
 
N/A
 
Item
24
Description
Are fees required to be disclosed under §707.4(b) (that were debited to the account during the statement period) itemized by dollar and type? (§ 707.6(b)(3))
YES
 
NO
 
N/A
 
Item
25
Description
Is the total number of days in the statement period, or the beginning and ending dates of the period disclosed? (§ 707.6(b)(4))
YES
 
NO
 
N/A
 
Item
26
Description
Does the periodic statement disclose the Total Overdraft Fees, using that term, for the statement period? (§ 707.11(a))
YES
 
NO
 
N/A
 
Item
27
Description
Does the periodic statement disclose the total amount of all fees or charges for returning items unpaid, for the statement period? (§ 707.11(a))
YES
 
NO
 
N/A
 
Item
28
Description
Does the periodic statement have a separate disclosure of the Total Overdraft Fees for the current year to date? (§ 707.11(a))
YES
 
NO
 
N/A
 
Item
29
Description
Does the period statement have a separate disclosure for the total amount of all fees or charges for returning items unpaid for the current year to date? (§ 707.11(a))
YES
 
NO
 
N/A
 

Payment of Dividends (§ 707.7)

Payment of Dividends (§707.7)
Item Description YES NO N/A
Item
30
Description
If the credit union uses the average daily balance method, and calculates dividends for a period other than the statement period, was the APY earned and the amount of dividends earned based on that period rather than the statement period? (§ 707.6(a))
YES
 
NO
 
N/A
 
Item
31
Description
Does the credit union calculate dividends on the full amount of principal in the account each day by use of either the daily balance method or the average daily balance method? (§ 707.7(a)(1))
YES
 
NO
 
N/A
 
Item
32
Description
Does the credit union use the same method to determine any minimum balance required to earn dividends as it uses to determine the balance on which dividends are calculated? (§ 707.7(a)(2))
YES
 
NO
 
N/A
 
Item
33
Description
Do dividends begin to accrue not later than the business day specified for interest bearing accounts in section 606 of the Expedited Funds Availability Act?
YES
 
NO
 
N/A
 
Item
33(a)
Description
Do dividends accrue until the day the funds are withdrawn? (§ 707.7(c))
YES
 
NO
 
N/A
 
Item
34
Description
Do the advertisements refrain from misleading or inaccurate statements and do they accurately represent the deposit contract?
YES
 
NO
 
N/A
 
Item
34(a)
Description
Do the advertisements refrain from using the terms “free” or “no cost” if any maintenance or activity fee may be imposed?
YES
 
NO
 
N/A
 
Item
34(b)
Description
Do the advertisements refrain from using the word “profit” when referring to interest paid on an account? (§ 707.8(a))
YES
 
NO
 
N/A
 
Item
35
Description
If the credit union advertises rates on accounts, are the rates stated as an “annual percentage yield?”
YES
 
NO
 
N/A
 
Item
35(a)
Description
If the credit union uses the abbreviation “APY,” has the term annual percentage yield” been stated at least once in the advertisement?
YES
 
NO
 
N/A
 
Item
35(b)
Description
If the credit union states the dividend rate, using that term, in conjunction with the APY, is it not more conspicuous than the APY? (§ 707.8(b))
YES
 
NO
 
N/A
 
Item
35(c)
Description
Are the annual percentage yields and dividend rates rounded to the nearest one-hundredth of one percentage point (.01%) and expressed to two decimal places? (§ 707.3(f)(1))
YES
 
NO
 
N/A
 
Item
36
Description
If the credit union advertises “tiered rate” accounts, does the credit union state all of the APYs, including ranges where applicable, as well as the corresponding minimum balance requirements? (§ 707.8(c)(3))
YES
 
NO
 
N/A
 

Advertising Requirements (§707.8)

Advertising Requirements (§707.8)
Item Description YES NO N/A
Item
37
Description
If the credit union advertises “stepped rate” accounts, does the credit union accurately disclose the APY? (§ 707.8(b))
YES
 
NO
 
N/A
 
Item
38
Description
If the deposit advertisements placed by the credit union state the APY, are the following disclosures stated clearly and conspicuously to the extent applicable?
YES
 
NO
 
N/A
 
Item
38(a)
Description
Variable rate notice; (§ 707.8(c)(1))
YES
 
NO
 
N/A
 
Item
38(b)
Description
Time APY is offered; (§ 707.8(c)(2))
YES
 
NO
 
N/A
 
Item
38(c)
Description
Minimum balance to obtain the APY; (§707.8(c)(3))
YES
 
NO
 
N/A
 
Item
38(d)
Description
Minimum opening deposit; (§ 707.8(c)(4))
YES
 
NO
 
N/A
 
Item
38(e)
Description
Effect of fees (§ 707.8(c)(5)); and
YES
 
NO
 
N/A
 
Item
38(f)
Description
The following features of time accounts (§ 707.8(c)(6)):
YES
N/A
NO
N/A
N/A
N/A
Item
38(f)(i)
Description
Time requirements; and (§ 707.8(c)(6)(i))
YES
 
NO
 
N/A
 
Item
38(f)(ii)
Description
Notice of early withdrawal penalties. (§ 707.8(c)(6)(ii))
YES
 
NO
 
N/A
 
Item
39
Description
If a bonus is stated in an advertisement, does the advertisement state the following information, as applicable:
YES
N/A
NO
N/A
N/A
N/A
Item
39(a)
Description
The “annual percentage yield,” using that term; (§ 707.8(d)(1))
YES
 
NO
 
N/A
 
Item
39(b)
Description
Time requirement to obtain the bonus; (§ 707.8(d)(2))
YES
 
NO
 
N/A
 
Item
39(c)
Description
Minimum balance required to obtain the bonus; (§ 707.8(d)(3))
YES
 
NO
 
N/A
 
Item
39(d)
Description
Minimum balance required to open the account (if it is greater than the minimum balance necessary to obtain the bonus) ; and, (§ 707.8(d)(4))
YES
 
NO
 
N/A
 
Item
39(e)
Description
When the bonus will be provided? (§ 707.8(d)(5))
YES
 
NO
 
N/A
 
Item
40
Description
Are exemptions to the requirements made for those media set forth under § 707.8(e)?
YES
 
NO
 
N/A
 
Item
41
Description
If the advertisement promotes overdraft services, does the advertising disclose, in a clear or conspicuous manner:
YES
N/A
NO
N/A
N/A
N/A
Item
41(a)
Description
The fee or fees for the payment of each overdraft
YES
 
NO
 
N/A
 
Item
41(b)
Description
The categories of transactions for which a fee for paying an overdraft may be imposed;
YES
 
NO
 
N/A
 
Item
41(c)
Description
The time period by which the member must repay or cover any overdraft; and
YES
 
NO
 
N/A
 
Item
41(d)
Description
The circumstances under which the credit union will not pay an overdraft? (§ 707.11(b)(1))
YES
 
NO
 
N/A
 
Item
42
Description
If the answer to 41 is “no,” Do any of the exceptions from § 707.11(b)(2) apply?
YES
 
NO
 
N/A
 
Item
43
Description
If the answer to 42 is “yes,” If the advertisement is an ATM screen or on a Telephone Response Machine, does the advertisement disclose:
YES
N/A
NO
N/A
N/A
N/A
Item
43(a)
Description
The fee or fees for the payment of each overdraft; and
YES
 
NO
 
N/A
 
Item
43(b)
Description
The time period by which the member must repay or cover any overdraft? (§ 707.11(b)(3))
YES
 
NO
 
N/A
 
Item
44
Description
If the answer to 42 is “yes,” If the advertisement is an indoor sign, does the advertisement contain a clear and conspicuous statement that:
YES
N/A
NO
N/A
N/A
N/A
Item
44(a)
Description
Fees may apply; and
YES
 
NO
 
N/A
 
Item
44(b)
Description
Member should contact an employee for further information about applicable fees and terms? (§ 707.11(b)(4))
YES
 
NO
 
N/A
 

Account Balance Overdraft Disclosure Requirements (§707.11)

Account Balance Overdraft Disclosure Requirements (§707.11)
Item Description YES NO N/A
Item
45
Description
If a credit union displays a member’s account balance information on automated systems, does the credit union ensure that it does not include additional amounts that the credit union may provide to cover an item when there are insufficient or unavailable funds in the member’s account? (§ 707.11(c))
YES
 
NO
 
N/A
 
Item
46
Description
If a credit union discloses additional account balances that include additional amounts that the credit union may provide to cover an item when there are insufficient or unavailable funds in the member’s account, does the credit union:
YES
N/A
NO
N/A
N/A
N/A
Item
46(a)
Description
Prominently state that any such balance includes these additional funds?
YES
 
NO
 
N/A
 
Item
46(b)
Description
Additional amounts are not available for all transactions (if applicable)?
YES
 
NO
 
N/A
 

Record Retention Requirements (§707.9)

Record Retention Requirements (§707.9)
Item Description YES NO N/A
Item
47
Description
Has the credit union maintained evidence of compliance for a minimum of 2 years after the date disclosures are required to be made or action is required to be taken? (§ 707.9(c))
YES
 
NO
 
N/A
 
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