What is required of institutions regarding notification of changes to fees and terms?

The requirement for institutions to notify customers about changes to fees and terms before those changes are implemented is a core principle of the Truth in Savings Act (TISA). This law is designed to ensure transparency and fairness in the practices of financial institutions regarding deposit accounts.

By requiring prior notification, TISA provides customers with essential information that allows them to make informed decisions about their accounts. This advance notice enables consumers to assess the impact of any changes on their finances and provides them the opportunity to switch accounts or institutions if they disagree with the new terms. Thus, the essence of the law is to promote clarity and ensure that customers are not taken by surprise by changes that could affect their financial commitments.

In the context of other options, notifying customers after changes are made does not align with the intention of the Act, as it compromises consumers' ability to make informed choices. Similarly, not informing customers about minor changes undermines the principle of transparency that TISA aims to promote. Lastly, assuming that only changes affecting interest rates require notification would be misleading, as the Act stipulates that all significant changes in charges or terms—including fees—should be disclosed in advance.