12 USC 1831x et seq.;
113 Stat.1410; Pub. L. 106-102 (November 12, 1999)
(a) Regulations required. Federal Deposit Insurance Act Section 47 Insurance Customer Protections
(1) The Federal banking agencies shall
prescribe and publish in final form, before the end of the 1-year
period beginning on the date of the enactment of the Gramm-Leach-Bliley
Act, customer protection regulations (which the agencies jointly determine
to be appropriate) that—
(A) apply to retail sales practices,
solicitations, advertising, or offers of any insurance product by
any depository institution or any person that is engaged in such activities
at an office of the institution or on behalf of the institution; and
(B) are consistent
with the requirements of this Act and provide such additional protections
for customers to whom such sales, solicitations, advertising, or offers
are directed.
(2) The regulations prescribed pursuant
to paragraph (1) shall extend such protections to any subsidiary of
a depository institution, as deemed appropriate by the regulators
referred to in paragraph (3), where such extension is determined to
be necessary to ensure the consumer protections provided by this section.
(3) The Federal banking
agencies shall consult with each other and prescribe joint regulations
pursuant to paragraph (1), after consultation with the State insurance
regulators, as appropriate.
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(b) Sales practices. The regulations prescribed
pursuant to subsection (a) shall include antitying and anticoercion
rules applicable to the sale of insurance products that prohibit a
depository institution from engaging in any practice that would lead
a customer to believe an extension of credit, in violation of section
106(b) of the Bank Holding Company Act Amendments of 1970, is conditional
upon—
(1) the purchase of an
insurance product from the institution or any of its affiliates; or
(2) an agreement by the
consumer not to obtain, or a prohibition on the consumer from obtaining,
an insurance product from an unaffiliated entity.
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(c) Disclosures and advertising. The
regulations prescribed pursuant to subsection (a) shall include the
following provisions relating to disclosures and advertising in connection
with the initial purchase of an insurance product:
(1) (A) Requirements
that the following disclosures be made orally and in writing before
the completion of the initial sale and, in the case of clause (iii),
at the time of application for an extension of credit:
(i) As appropriate,
the product is not insured by the Federal Deposit Insurance Corporation,
the United States Government, or the depository institution.
(ii) In the case of a variable
annuity or other insurance product which involves an investment risk,
that there is an investment risk associated with the product, including
possible loss of value.
(iii) The approval of an extension of credit may not be conditioned
on—
(I) the purchase of an insurance
product from the institution in which the application for credit is
pending or of any affiliate of the institution; or
(II) an agreement by the consumer not to
obtain, or a prohibition on the consumer from obtaining, an insurance
product from an unaffiliated entity.
(B) Regulations prescribed under subparagraph
(A) shall encourage the use of disclosure that is conspicuous, simple,
direct, and readily understandable, such as the following:
(i) “NOT FDIC-INSURED”.
(ii) “NOT GUARANTEED BY THE BANK”.
(iii) “MAY GO DOWN IN VALUE”.
(iv) “NOT INSURED BY ANY
GOVERNMENT AGENCY”.
(C) Nothing in this paragraph requires the
inclusion of the foregoing disclosures in advertisements of a general
nature describing or listing the services or products offered by an
institution.
(D) Disclosures
shall not be considered to be meaningfully provided under this paragraph
if the institution or its representative states that disclosures required
by this subsection were available to the customer in printed material
available for distribution, where such printed material is not provided
and such information is not orally disclosed to the customer.
(E) In prescribing the requirements
under subparagraphs (A) and (F), necessary adjustments shall be made
for purchase in person, by telephone, or by electronic media to provide
for the most appropriate and complete form of disclosure and acknowledgments.
(F) A requirement that a
depository institution shall require any person selling an insurance
product at any office of, or on behalf of, the institution to obtain,
at the time a consumer receives the disclosures required under this
paragraph or at the time of the initial purchase by the consumer of
such product, an acknowledgment by such consumer of the receipt of
the disclosure required under this subsection with respect to such
product.
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(2) A prohibition on any practice, or any
advertising, at any office of, or on behalf of, the depository institution,
or any subsidiary, as appropriate, that could mislead any person or
otherwise cause a reasonable person to reach an erroneous belief with
respect to—
(A) the uninsured nature of any insurance
product sold, or offered for sale, by the institution or any subsidiary
of the institution;
(B) in the case of a variable annuity or insurance product that involves
an investment risk, the investment risk associated with any such product;
or
(C) in the case
of an institution or subsidiary at which insurance products are sold
or offered for sale, the fact that—
(i) the approval of an extension
of credit to a customer by the institution or subsidiary may not be
conditioned on the purchase of an insurance product by such customer
from the institution or subsidiary; and
(ii) the customer is free to purchase the
insurance product from another source.
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(d) Separation of banking
and nonbanking activities.
(1) The regulations prescribed pursuant
to subsection (a) shall include such provisions as the Federal banking
agencies consider appropriate to ensure that the routine acceptance
of deposits is kept, to the extent practicable, physically segregated
from insurance product activity.
(2) Regulations prescribed pursuant to
paragraph (1) shall include the following requirements:
(A) A clear
delineation of the setting in which, and the circumstances under which,
transactions involving insurance products should be conducted in a
location physically segregated from an area where retail deposits
are routinely accepted.
(B) Standards that permit any person
accepting deposits from the public in an area where such transactions
are routinely conducted in a depository institution to refer a customer
who seeks to purchase any insurance product to a qualified person
who sells such product, only if the person making the referral receives
no more than a one-time nominal fee of a fixed dollar amount for each
referral that does not depend on whether the referral results in a transaction.
(C) Standards prohibiting
any depository institution from permitting any person to sell or offer
for sale any insurance product in any part of any office of the institution,
or on behalf of the institution, unless such person is appropriately
qualified and licensed.
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(e) Domestic violence discrimination prohibition.
(1) In the case of an applicant
for, or an insured under, any insurance product described in paragraph
(2), the status of the applicant or insured as a victim of domestic
violence, or as a provider of services to victims of domestic violence,
shall not be considered as a criterion in any decision with regard
to insurance underwriting, pricing, renewal, or scope of coverage
of insurance policies, or payment of insurance claims, except as required
or expressly permitted under State law.
(2) The prohibition contained in paragraph
(1) shall apply to any life or health insurance product which is sold
or offered for sale, as principal, agent, or broker, by any depository
institution or any person who is engaged in such activities at an
office of the institution or on behalf of the institution.
(3) For purposes of this subsection,
the term “domestic violence” means the occurrence of one or more of
the following acts by a current or former family member, household
member, intimate partner, or caretaker:
(A) Attempting to cause
or causing or threatening another person physical harm, severe emotional
distress, psychological trauma, rape, or sexual assault.
(B) Engaging in a course
of conduct or repeatedly committing acts toward another person, including
following the person without proper authority, under circumstances
that place the person in reasonable fear of bodily injury or physical
harm.
(C) Subjecting
another person to false imprisonment.
(D) Attempting to cause or cause damage
to property so as to intimidate or attempt to control the behavior
of another person.
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(f) Consumer grievance process. The Federal
banking agencies shall jointly establish a consumer complaint mechanism,
for receiving and expeditiously addressing consumer complaints alleging
a violation of regulations issued under the section, which shall—
(1) establish a group within
each regulatory agency to receive such complaints;
(2) develop procedures for investigating
such complaints;
(3)
develop procedures for informing consumers of rights they may have
in connection with such complaints; and
(4) develop procedures for addressing concerns
raised by such complaints, as appropriate, including procedures for
the recovery of losses to the extent appropriate.
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(g) Effect on other authority.
(1) No provision of this section shall
be construed as granting, limiting, or otherwise affecting—
(A) any
authority of the Securities and Exchange Commission, any self-regulatory
organization, the Municipal Securities Rulemaking Board, or the Secretary
of the Treasury under any Federal securities law; or
(B) except as provided in paragraph
(2), any authority of any State insurance commission (or any agency
or office performing like functions), or of any State securities commission
(or any agency or office performing like functions), or other State
authority under any State law.
(2) (A) Except
as provided in subparagraph (B), insurance customer protection regulations
prescribed by a Federal banking agency under this section shall not
apply to retail sales, solicitations, advertising, or offers
of any insurance product by any depository institution or to any person
who is engaged in such activities at an office of such institution
or on behalf of the institution, in a State where the State has in
effect statutes, regulations, orders, or interpretations, that are
inconsistent with or contrary to the regulations prescribed by the
Federal banking agencies.
(B) (i) If, with respect to any provision
of the regulations prescribed under this section, the Board of Governors
of the Federal Reserve System, the Comptroller of the Currency, and
the Board of Directors of the Corporation determine jointly that the
protection afforded by such provision for customers is greater than
the protection provided by a comparable provision of the statutes,
regulations, orders, or interpretations referred to in subparagraph
(A) of any State, the appropriate State regulatory authority shall
be notified of such determination in writing.
(ii) Before making a final determination under
clause (i), the Federal agencies referred to in clause (i) shall give
appropriate consideration to comments submitted by the appropriate
State regulatory authorities relating to the level of protection afforded
to consumers under State law.
(iii) If the Federal agencies referred to
in clause (i) jointly determine that any provision of the regulations
prescribed under this section affords greater protections than a comparable
State law, rule, regulation, order, or interpretation, those agencies
shall send a written preemption notice to the appropriate State regulatory
authority to notify the State that the Federal provision will preempt
the State provision and will become applicable unless, not later than
3 years after the date of such notice, the State adopts legislation
to override such preemption.
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(h) Non-discrimination against
non-affiliated agents. The Federal banking agencies shall ensure
that the regulations prescribed pursuant to subsection (a) shall not
have the effect of discriminating, either intentionally or unintentionally,
against any person engaged in insurance sales or solicitations that
is not affiliated with a depository institution.
[12 USC 1831x. As added
by act of Nov. 12, 1999 (113 Stat. 1410).]
