Federal Regulators Issue New Insurance and Annuity Sales Regs
Banking & Financial Services Policy Report (12/01/01) Vol. 20, No. 12 p.11; Mensch, Andrew B.; Mosher, Donald J.

Federal banking regulators have issued new consumer-protection regulations regarding sales of insurance products by, at, or on behalf of depository institutions. The regulations, which cover bank sales of insurance and annuity products to consumers, were issued under the authority of Section 305 of the Gramm-Leach-Bliley Act, which added a new section, Section 47, to the Federal Deposit Insurance Act (FDIA). Under the rules, any person offering insurance or annuity products at a bank's office or on a bank's behalf must be qualified and licensed under applicable state standards. Banks must keep the area where insurance-related transactions take place physically separate from the parts of the bank where retail deposits are taken from the general public. Banks cannot engage in any practice that would lead a consumer to believe that an extension of credit depends on the consumer's purchase of insurance from the bank or an agreement not to purchase insurance from someone else. The rules also prohibit misleading practices or advertisements that imply that the insurance or annuity is insured by the federal government, the bank, or the Federal Deposit Insurance Corp., or that there is no investment risk, in the case of a product that involves investment risk. In addition, the regulations require certain disclosures related to offers of insurance or annuity products and govern the timing and method of the disclosures. However, the regulations do not apply in a state that has "statutes, regulations, orders, or interpretations, that are inconsistent with or contrary to" the regulations.


Back   |  IRA.com Home   |  News Archive