Vol. 146, No. 6 — March 14, 2012

Registration

SOR/2012-24 March 2, 2012

BANK ACT
COOPERATIVE CREDIT ASSOCIATIONS ACT
TRUST AND LOAN COMPANIES ACT

Access to Funds Regulations

P.C. 2012-217 March 1, 2012

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 458.2 (see footnote a), 458.3 (see footnote b), 459.4 (see footnote c), 575.1 (see footnote d) and 576.2 (see footnote e) of the Bank Act (see footnote f), sections 385.251 (see footnote g), 385.252 (see footnote h) and 385.28 (see footnote i) of the Cooperative Credit Associations Act (see footnote j) and sections 443.1 (see footnote k), 443.2 (see footnote l) and 444.3 (see footnote m) of the Trust and Loan Companies Act (see footnote n), hereby makes the annexed Access to Funds Regulations.

ACCESS TO FUNDS REGULATIONS

INTERPRETATION

1. The following definitions apply in these Regulations.

“business day” does not include a Saturday or a holiday. (jour ouvrable)

“eligible enterprise” means a business with authorized credit of less than $1 million, fewer than 500 employees and annual revenues of less than $50 million. (entreprise admissible)

“institution” means any of the following:

1. (a) a bank, as defined in section 2 of the Bank Act;
   
   
2. (b) an authorized foreign bank, as defined in section 2 of the Bank Act;
   
   
3. (c) a retail association, as defined in section 2 of the Cooperative Credit Associations Act;
   
   
4. (d) a company, as defined in section 2 of the Trust and Loan Companies Act. (institution)
   

“point of service” means a physical location to which the public has access and at which an institution, an affiliate of the institution, or an agent or representative of the institution or affiliate carries on business with the public and opens or initiates the opening of retail deposit accounts of the institution or affiliate through natural persons in Canada. (point de service)

APPLICATION

2. Sections 3 and 4 apply only with respect to paper-based cheques or other instruments deposited in Canada that are encoded with magnetic ink to allow for character recognition, are not damaged or mutilated such that they are unreadable by cheque clearing systems, are drawn on an institution’s branch located in Canada and are issued in Canadian dollars.

MAXIMUM CHEQUE HOLD PERIOD

3. An institution must make available for withdrawal any funds deposited by cheque or other instrument to a retail deposit account or to a deposit account held by an eligible enterprise

1. (a) in the case of a cheque or other instrument not exceeding $1,500, no more than four business days after the day of the deposit if it is deposited in person with an employee at one of the institution’s branches or points of service or no more than five business days after the day of the deposit if it is deposited in any other manner; and
   
   
2. (b) in the case of a cheque or other instrument greater than $1,500, no more than seven business days after the day of the deposit if it is deposited in person with an employee at one of the institution’s branches or points of service or no more than eight business days after the day of the deposit if it is deposited in any other manner.
   

AVAILABILITY OF FIRST $100

4. An institution must make the first $100 of all funds deposited by a cheque or other instrument on any one day to a retail deposit account available for withdrawal

1. (a) immediately, if it is deposited in person with an employee at one of the institution’s branches or points of service; and
   
   
2. (b) on the business day following the day of the deposit, if it is deposited in any other manner.
   

EXCEPTIONS

5. Section 3 does not apply in respect of a deposit that is made by an eligible enterprise if the institution has reasonable grounds to believe that there is a material increased credit risk, having regard to factors such as

1. (a) an escalating overdraft balance that is not being reduced by deposits received;
   
   
2. (b) a negative change in the credit score or other behaviour scores that may impact the credit risk of the enterprise;
   
   
3. (c) an unexplained change in the history of cheques or other instruments deposited to the account;
   
   
4. (d) high numbers of cheques or other instruments deposited that are returned as dishonoured items from other institutions that may impact the available balance in the account; or
   
   
5. (e) notice of bankruptcy or of creditor action against the enterprise.
   

6. (1) Sections 3 and 4 do not apply in respect of

1. (a) a deposit that the institution has reasonable grounds to believe is being made for illegal or fraudulent purposes in relation to the depositor’s account;
   
   
2. (b) an account that has been open for less than 90 days;
   
   
3. (c) a cheque or other instrument that has been endorsed more than once; or
   
   
4. (d) a cheque or other instrument that is deposited at least six months after the date of the cheque.
   

(2) An institution that relies on this section as grounds for refusing to comply with section 3 or 4 must provide the depositor in writing with notice of its refusal and a statement indicating that the depositor may contact the Financial Consumer Agency of Canada if they have a complaint, including contact information for the Agency,

1. (a) immediately, if the cheque or other instrument was deposited in person with an employee at one of the institution’s branches or points of service; or
   
   
2. (b) upon request, if it was deposited in any other manner.
   

DISCLOSURE OF POLICY

7. An institution must disclose in writing to any person who opens a retail deposit account to which they may deposit cheques or other instruments

1. (a) the maximum periods during which the institution may hold funds deposited by cheque or other instruments before making them available for withdrawal, as set out in section 3; and
   
   
2. (b) the institution’s policies concerning the maximum period during which the institution may hold funds deposited by cheque or other instrument in any situation to which section 3 does not apply.
   

8. An institution must disclose the information referred to in section 7 to its customers and to the public by means of a written notice, copies of which must be displayed and made available at each of the institution’s branches where personal deposit accounts are offered, at each of the institution’s points of service and on each of the institution’s websites through which it offers products and services in Canada.

NOTICE OF CHANGE IN POLICY

9. (1) An institution must disclose any change to the information referred to in section 7

1. (a) by means of a notice that is displayed, for a period of at least 60 days immediately before the effective date of the change, at each of the institution’s branches where products or services are offered, at each of the institution’s points of service and on each of the institution’s websites through which it offers products and services in Canada; and
   
   
2. (b) by providing every customer in whose name a retail deposit account is kept and to whom a statement of account is provided with a notice in writing at least 30 days before the effective date of the change or, if the customer has instructed the institution in writing to provide such a notice to another person, by providing that other person with the notice in writing at least 30 days before the effective date of the change.
   

(2) If the change results in a shortened period during which an institution may hold funds deposited by cheque or other instrument, the institution may meet the obligations set out in paragraph (1)(a) and (b) after the effective date of the change.

(3) A notice that is sent to a customer by mail is considered to be provided to the customer on the fifth business day after the postmark date.

REPEAL

10. The Cheque Holding Policy Disclosure (Banks) Regulations (see footnote 1) are repealed.

COMING INTO FORCE

11. These Regulations come into force on August 1, 2012.

N.B. The Regulatory Impact Analysis Statement for these Regulations appears following SOR/2012-23, Negative Option Billing Regulations.

Footnote a
S.C. 2007, c. 6, s. 34

Footnote b
S.C. 2009, c. 2, s. 271

Footnote c
S.C. 2007, c. 6, s. 37

Footnote d
S.C. 2009, c. 2, s. 274

Footnote e
S.C. 2007, c. 6, s. 93

Footnote f
S.C. 1991, c. 46

Footnote g
S.C. 2007, c. 6, s. 168

Footnote h
S.C. 2009, c. 2, s. 278

Footnote i
S.C. 2007, c. 6, s. 170

Footnote j
S.C. 1991, c. 48

Footnote k
S.C. 2007, c. 6, s. 366

Footnote l
S.C. 2009, c. 2, s. 291

Footnote m
S.C. 2007, c. 6, s. 368

Footnote n
S.C. 1991, c. 45

Footnote 1
SOR/2002-39