ABA Recommends to NACHA Not to Change Early Funds Availability Rules

The American Bankers Association last week urged NACHA not to change rules around financial institutions offering early funds availability due to the lack of statistical evidence, despite anecdotal stories of the practice increasing liabilities.

ABA acknowledged that providing early funds availability may increase some risks to the originating depository financial institution if it made the credit entry in error or was the victim of fraud, but added that “while there are many anecdotes of early availability increasing liabilities, there is no statistical evidence presented for consideration. We cannot recommend rule changes to mitigate risk when that risk is not measured.” More information would be needed about how often reversals are returned to the originating financial institution due to the funds being made available early and how large the losses are, to determine if a rule change proposal is warranted, ABA said.

The association also expressed concern that changes reallocating liability to the receiving depository financial institution may lead some to change their policies and revert to making funds available on the settlement date, which “would create the misperception the ACH system is becoming slower. ABA supports faster payments and at this time opposes any changes that may appear to slow a recipient’s receipt of funds.”