Agencies Propose Consumer Protection Rules For Insurance
|August 21, 2000|
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision jointly announced today proposed consumer protection rules for the sale of insurance products by depository institutions. The proposed rule published in today's Federal Register implements section 305 of the recently enacted Gramm-Leach-Bliley Act.
Comments are due October 5.
The Act directs the agencies to publish rules that apply to retail sales practices, solicitations, advertising or offers of insurance.
The proposed rule applies to any depository institution or any person selling, soliciting, advertising, or offering insurance products or annuities to a consumer at an office of the institution or on behalf of the institution. The following disclosures would be required:
These disclosures must be made orally and in writing before the completion of the sale of an insurance product or annuity. The disclosures may be made electronically if the consumer affirmatively consents provided the consumer can retain or later obtain the disclosures by printing or storing them electronically, such as by downloading. The rule also requires written acknowledgement from the consumer that disclosures were received. Disclosures made electronically can be acknowledged electronically or in paper form by the consumer.
The location of insurance sales and payment of referral fees is also addressed in the proposed rule. To the extent practicable, a depository institution must keep insurance and annuity sales activities physically segregated from the areas where retail deposits are routinely accepted from the general public. In addition, bank employees may refer a consumer who seeks to purchase an insurance product or annuity to a qualified salesperson. The referral fee may be no more than a one-time, nominal fee that does not depend on whether the referral results in a transaction.
Persons who sell insurance products or annuities must be qualified and licensed under applicable state insurance licensing standards under the proposed rule. .