Brokered deposits rule from last spring triggers 3 FAQs last week of year

The brokered deposits rule triggered three new “frequently asked questions” (FAQs) from the Federal Deposit Insurance Corp. (FDIC) last week, covering health savings accounts and filing deadlines under two areas.

The new FDIC FAQs cover the brokered deposits rule which took effect in April of last year. They cover: circumstances under which third parties can qualify for the exception for third-party administrators of health savings accounts; filing deadlines and penalties for filers who rely on the “primary purpose” exception for instances where an agent has less than 25% of the total “assets under administration” for its customers; and filing deadlines and penalties for the annual certification under the “enabling transaction” test.

The agency also acknowledged an additional business relationship that meets the primary purpose exception to the deposit broker definition. According to the agency, the agent or nominee’s primary purpose in placing deposits at insured depository institutions is to provide “non-discretionary custodial services on behalf of the depositor or depositor’s agent,” according to the Federal Register notice. Such entities, the notice stated, will be deemed to meet the primary purpose exception.

The exception does not apply, the FDIC stated, to custodial agents that “play any role” in determining at which banks to place customer funds, including, as an example, agents that create or use algorithms to make fund placement determinations.

Questions and Answers Related to Brokered Deposits Rule – As of December 29, 2021

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