Vermont Regulatory Update

Vermont Regulatory Update

The Vermont Department of Financial Regulation recently issued revised regulations regarding the records kept by financial institutions and prescribing the period for which records shall be retained.  Regulation B-2014-01 replaces Regulation B-92-1, effective July 1, 2014.

 

VERMONT REGULATION B-2014-1

 

This regulation applies to financial institutions, credit unions, licensed lenders, mortgage brokers, loan servicers, sales finance companies, as defined by Vermont law (the “Institutions”).

The types of Institutions included in these definitions include federally or nationally chartered Institutions, insofar as this regulation does not contravene paramount federal law.

The general intent of this regulation is to require that an Institution be able to rebuild a transaction for seven years from the date of the transaction or seven years from the payoff date of a loan, as applicable.  However, this regulation requires that certain records be held longer than seven years and gives Institutions the option to hold some records for less than seven years.

This regulation applies to records created on or after July 1, 2014.  The retention period applicable to records created prior to July 1, 2014 shall be the period required at the time such record was created.

An Institution shall adopt and implement a written record management policy that includes:

·        retention periods for all of the Institution’s records;

·        the manner of retention;

·        the method of disposal of such records upon expiration of the retention period; and

·        procedures to protect records from theft, fire, vandalism, loss, damage, or unauthorized access.

In addition to the retention requirements, any record that contains confidential information should be treated in accordance with the Institution’s confidentiality, privacy, and security policies.

Institutions must retain all records for at least the minimum time period specified in this regulation.

If the Institution does not maintain a record enumerated in this regulation, but maintains a similar record with equivalent information, the Institution’s records must be retained for the period of time specified herein for such equivalent records.

In the event a retention period imposed by other state laws or regulations, federal laws or regulations, court orders, other governmental agencies, or Institution policies conflicts with the retention period required by the regulation, the longer retention period will control.

Records that are not specifically enumerated, but that are subject to retention requirements pursuant to other state laws or regulations, federal laws or regulations, court orders, or Institution policies, will be retained for the period specified by such applicable requirement.

Records that are not specifically enumerated and that are not subject to retention requirements pursuant to other state laws or regulations, federal laws or regulations, court orders, or Institution policies may be destroyed at the end of seven (7) years from the date of the transaction or at the end of seven (7) years from the payoff date of a loan, as applicable, upon authorization of the Institution’s governing body.

Records that are not specifically enumerated, that are not subject to retention requirements pursuant to other state laws or regulations, federal laws or regulations, or court orders, and are not part of an actual transaction or loan may be destroyed at the discretion of the Institution as specified in its record retention policy as authorized by the Institution’s governing body.

The content of the record and not the medium in which it is sent or received determines the applicable record retention period.  (For example, a document received by e-mail may be correspondence, a promissory note, or a casualty liability policy depending on the content of the e-mail.)

All records must be maintained in a form and manner that is consistent with reasonable business practices and with any applicable law or regulation.  Without limiting the foregoing, records may be maintained in original form, as a copy, or in a manner that can accurately produce, regenerate, or transmit the original record.  Records retained in paper, photograph, microprocess, magnetic, digital, mechanical or electronic media, or in or by any other information storage device or process which forms a durable medium will be treated as the equivalent of original records.

Institutions must dispose of records in accordance with the Vermont Document Safe Destruction Act.

Retention periods specified for records listed in this regulation apply to equivalent records produced or maintained by means of electronic data processing.

An Institution must adopt and implement a written policy to protect electronic data processing files from theft, fire, vandalism, loss, damage, or unauthorized access.

In addition to any other sanctions available to the Commissioner of the Department of Financial Regulation, violations of this regulation are subject to criminal and civil penalties as provided by Vermont law.

For a list of records and their corresponding retention periods, please seehttp://www.dfr.vermont.gov/reg-bul-ord/record-retention-financial-institutions-credit-unions-independent-trust-companies.