Sec. 90.4. Index

(a) General provisions.

A single index for the open-end account shall be chosen from among the indices approved by the superintendent pursuant to Part 333 of this Title. The rate or rates for the open-end account may be based directly on the index values or on the index values plus or minus additional percentage points; provided, however, that variations in the rate or rates shall correspond directly to movements in the index. This Part imposes no requirement on lending institutions to place limitations on the adjustment in the rate or rates for the open-end account, as such adjustment would otherwise be allowed by movements in the index. However, any lending institution which adopts limitations of any kind on changes in the rate shall provide for equal limitations on both increases and decreases. Similarly, rate adjustments may be rounded to the nearest percentage point or fraction thereof as determined by the lending institution, provided that rounding applies equally to decreases and increases in rates. Subject to the rounding provisions, increases in the index need not be used at each rate calculation date but may be accumulated once to the next rate calculation date, but decreases in the index must be reflected at each rate calculation date.

(b) Changes in the index.

A lending institution may provide for a substitute index similar to the chosen index only in the event that the initial index becomes unavailable. In any other case, if the lending institution proposes to change the index used for the open-end account, application in letter form for permission to do so must be made to the superintendent, and, in the case of approval for such change, a notification of the change must be sent to customers at least 30 days prior to the change.

(c) Information and disclosures with respect to the history of the index.

The disclosure shall identify the index and shall contain a statement that past changes in the index are not necessarily predictive of future changes in the index. The lending institution shall provide the high and low figures for the index and the dates at which these levels were reached, for each of the three calendar years preceding the calendar year in which the open-end account is opened or when a variable rate provision is added to an existing account. In addition, if an open-end account is opened after August 31st of any calendar year or a variable rate provision is added to become effective after August 31st of any calendar year, the disclosure shall include the high and low figures for the index's performance through June 30th of that year, and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding that calendar year in which the open-end account is opened or a variable-rate provision becomes effective, prior to March 1st of that year.