So, an access card is a credit card under Regulation Z. Regulation Z applies. But this still leaves the question of whether Regulation E also applies. Regulation E applies to “access devices.” These are cards, codes or other means of access to a consumer’s account that may be used to initiate electronic funds transfers. A HELOC access card does initiate electronic funds transfers from a consumer’s HELOC account, so they are seemingly an access device. However, “account” is a specific term in the context of Regulation E and a crucial part of the definition of an access device. “’Account’ means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes.” A HELOC can undoubtedly be for personal, family or household purposes, but a loan account is not an asset account. A checking account is an asset account because you wholly own the funds in the account. They add to your net worth. A loan account is a liability. You will have to pay those funds back later, so the withdrawal of those funds subtracts from your net worth. We could call loans a liability account, but that makes them less marketable. So, generally, a HELOC is not an account under Regulation E, even if it can make electronic transfers because it’s a loan account and not an asset account. So, this cannot meet the Regulation E definition of a “debit card” or “access device,” and, in turn, Regulation E is not applicable. An access device initiates transfers from an “account,” and a HELOC is not an “account” for Regulation E purposes. Therefore, the bank wouldn’t be required to give Regulation E disclosures with a HELOC access device, but that doesn’t mean it could not be done. If you’re looking to provide customers with the rights disclosed in Regulation E, you could, but it would be an internal policy decision. It is also worth noting that this is the typical way HELOCs are set up, but there can be other structures that may change the analysis above. Roger Morris serves Compliance Alliance as an Associate General Counsel. Roger brings a combination of unique experiences to C/A that he uses to provide guidance on a wide variety of regulatory and compliance issues. Learn how budgeting for top-tier support and guidance can save your program money. That’s Bankers Alliance. info@bankersalliance.org or (833) 683-0701. Holding Company of Compliance Alliance and Review Alliance Your time is valuable. You deserve an audit firm that provides your team with timely reviews and final reports within 45 days. C M Y CM MY CY CMY K 13 Colorado Banker
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