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U.S. Code as of:
01/19/04
Section 1831x. Insurance customer protections
(a) Regulations required
(1) In general
The Federal banking agencies shall prescribe and publish in
final form, before the end of the 1-year period beginning on
November 12, 1999, 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 chapter and
provide such additional protections for customers to whom such
sales, solicitations, advertising, or offers are directed.
(2) Applicability to subsidiaries
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) Consultation and joint regulations
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.
(b) Sales practices
The regulations prescribed pursuant to subsection (a) of this
section 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
1972 of this title, 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.
(c) Disclosures and advertising
The regulations prescribed pursuant to subsection (a) of this
section shall include the following provisions relating to
disclosures and advertising in connection with the initial purchase
of an insurance product:
(1) Disclosures
(A) In general
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) Uninsured status
As appropriate, the product is not insured by the Federal
Deposit Insurance Corporation, the United States Government,
or the depository institution.
(ii) Investment risk
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) Coercion
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) Making disclosure readily understandable
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) Limitation
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) Meaningful disclosures
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) Adjustments for alternative methods of purchase
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) Consumer acknowledgment
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.
(2) Prohibition on misrepresentations
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.
(d) Separation of banking and nonbanking activities
(1) Regulations required
The regulations prescribed pursuant to subsection (a) of this
section 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) Requirements
Regulations prescribed pursuant to paragraph (1) shall include
the following requirements:
(A) Separate setting
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) Referrals
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) Qualification and licensing requirements
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.
(e) Domestic violence discrimination prohibition
(1) In general
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) Scope of application
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) Domestic violence defined
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.
(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.
(g) Effect on other authority
(1) In general
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) Coordination with State law
(A) In general
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) Preemption
(i) In general
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) Considerations
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) Federal preemption and ability of States to override
Federal preemption
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.
(h) Non-discrimination against non-affiliated agents
The Federal banking agencies shall ensure that the regulations
prescribed pursuant to subsection (a) of this section 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.
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