Removal of Transferred OTS Regulations Regarding Consumer Protection in Sales of Insurance
Final rule.
CFR Part: "12 CFR Parts 343 and 390"
RIN Number: "RIN 3064-AE49"
Citation: "83 FR 13843"
Page Number: "13843"
"Rules and Regulations"
SUMMARY: The
DATES: This final rule is effective on
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION: Part 390, subpart I was included in the regulations that were transferred to the
The FDIC is adopting a final rule to rescind in its entirety part 390, subpart I and to modify the scope of part 343 to include State savings associations and their subsidiaries to conform to and reflect the scope of the
Upon removal of part 390, subpart I, the Consumer Protection in Sales of Insurance regulations applicable for all insured depository institutions for which the
I. Background
The Dodd-Frank Act
The Dodd-Frank Act /1/ provided for a substantial reorganization of the regulation of State and Federal savings associations and their holding companies. Beginning
FOOTNOTE 1 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010) (codified at 12 U.S.C. 5301 et seq.). END FOOTNOTE
Section 316(c) of the Dodd-Frank Act, codified at 12 U.S.C. 5414(c), further directed the
FOOTNOTE 2 76 FR 39247 (
Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act, codified at 12 U.S.C. 5412(b)(2)(B)(i)(II), granted the OCC rulemaking authority relating to both State and Federal savings associations, nothing in the Dodd-Frank Act affected the
As noted, on
FOOTNOTE 3 76 FR 47652 (
One of the OTS rules transferred to the
After careful review and comparison of part 390, subpart I, and part 343, the
Section 305 of the Gramm-Leach-Bliley Act ("GLB Act") /4/ added section 47 to the FDI Act, /5/ entitled "Insurance Consumer Protections." Section 47 applies to retail sales practices, solicitations, advertising, or offers of insurance products by depository institutions /6/ or persons engaged in these activities at an office of the institution or on behalf of the institution. /7/ Section 47 directs the
FOOTNOTE 4 Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat. 1338 (1999). END FOOTNOTE
FOOTNOTE 5 12 U.S.C. 1831x. END FOOTNOTE
FOOTNOTE 6 A "depository institution" in this context means a national bank in the case of institutions supervised by the OCC, a State member bank in the case of the FRB, a State nonmember bank in the case of the
FOOTNOTE 7 12 U.S.C. 1831x(a)(1)(A). END FOOTNOTE
FOOTNOTE 8 12 U.S.C. 1831x. END FOOTNOTE
FOOTNOTE 9 12 U.S.C. 1831x(a)(3). END FOOTNOTE
FOOTNOTE 10 65 FR 75822 (
Section 47 of the FDI Act instructs the Federal banking agencies to consult and coordinate with one another and prescribe and publish joint consumer protection regulations that apply to retail sales practices, solicitations, advertising, or offers of insurance products by depository institutions or persons engaged in these activities at an office of the institution or on behalf of the institution. /11/ Section 47 also requires the Federal banking agencies to consult with the State insurance regulators, as appropriate. /12/ Pursuant to Section 47, the Federal banking agencies consulted and coordinated with respect to this rulemaking and on an interagency basis jointly issued rules that are substantively identical with regard to consumer protection in sales of insurance requirements, /13/ including the same definition of a "covered person" or "you." /14/
FOOTNOTE 11 12 U.S.C. 1831x(a)(1). END FOOTNOTE
FOOTNOTE 12 12 U.S.C. 1831x(a)(3). END FOOTNOTE
FOOTNOTE 13 65 FR 75822 (
FOOTNOTE 14 65 FR 75822, 75824 (
The scope of part 343 in the
FOOTNOTE 15 Bank means an
FOOTNOTE 16 12 CFR 343.10. END FOOTNOTE
FOOTNOTE 17 12 CFR 390.180(a)(1), (2). END FOOTNOTE
FOOTNOTE 18 See 65 FR 75822, 75823 (
FOOTNOTE 19 65 FR 75822, 75823 (
FOOTNOTE 20 12 CFR 390.180(b). END FOOTNOTE
FOOTNOTE 21 12 CFR 343.10. END FOOTNOTE
FOOTNOTE 22 65 FR 75822, 75824 (
Accordingly, the portions of the OTS regulations that applied to State savings associations, their subsidiaries and their affiliates, originally codified at 12 CFR part 536 and subsequently transferred to
Although the former OTS rule and part 390, subpart I, covers savings and loan holding companies that are affiliated with savings associations in addition to savings associations, the
FOOTNOTE 23 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010) (codified at 12 U.S.C. 5412). END FOOTNOTE
FOOTNOTE 24 12 U.S.C. 5412. END FOOTNOTE
FOOTNOTE 25 12 CFR 536.1. END FOOTNOTE
FOOTNOTE 26 12 CFR 390.180. END FOOTNOTE
FOOTNOTE 27 12 CFR part 208, subpart H. END FOOTNOTE
After careful comparison of the
II. Proposed Rule
The functions of the former OTS that were transferred to the
Under the
III. Comments
The FDIC issued the
IV. Explanation of the Final Rule
As discussed in the
Consistent with the Proposed Rule, the Final Rule also amends the scope of part 343 to include State savings associations and their subsidiaries. The modified scope conforms to and reflects the scope of
V. Regulatory Process
A. The Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act ("PRA") of 1995, 44 U.S.C. 3501-3521, the
The Final Rule would rescind and remove from the
The Final Rule, as the Proposed Rule, (1) amends part 343 to include State savings associations and their subsidiaries within its scope; and (2) defines "
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act ("RFA"), requires that, in connection with a final rulemaking, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the proposed rule on small entities (defined in regulations promulgated by the
FOOTNOTE 28 5 U.S.C.
As discussed in the
FOOTNOTE 29 65 FR 75822 (
C. Small Business Regulatory Enforcement Fairness Act
The OMB has determined that the Final Rule is not a "major rule" within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), 5 U.S.C.
D. Plain Language
Section 722 of the GLB Act, codified at 12 U.S.C. 4809, requires each Federal banking agency to use plain language in all of its proposed and final rules published after
E. The Economic Growth and Regulatory Paperwork Reduction Act
Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 ("EGRPRA"), the
FOOTNOTE 30 Public Law 104-208, 110 Stat. 3009 (1996). END FOOTNOTE
E.
The Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires the
In addition, new regulations and amendments to regulations that impose additional reporting, disclosures or other new requirements on insured depository institutions generally must take effect on the first day of the calendar quarter that begins on or after the date on which the regulations are published in final form. /31/ The Final Rule has no new reporting or other new requirements on insured depository institutions. Therefore, the final rule is not subject to the requirements of the statute.
FOOTNOTE 31 12 U.S.C. 4802. END FOOTNOTE
List of Subjects
12 CFR Part 343
Banks, banking; Consumer protection in sales of insurance; Savings associations.
12 CFR Part 390
Consumer protection in sales of insurance.
Authority and Issuance
For the reasons stated in the preamble, the Board of Directors of the
1. Revise part 343 to read as follows:
PART 343--CONSUMER PROTECTION IN SALES OF INSURANCE
Sec.
343.10 Purpose and scope.
343.20 Definitions.
343.30 Prohibited practices.
343.40 What you must disclose.
343.50 Where insurance activities may take place.
343.60 Qualification and licensing requirements for insurance sales personnel.
Appendix A to Part 343--Consumer Grievance Process
Authority: 12 U.S.C. 1819 (Seventh and Tenth); 12 U.S.C. 1831x.
This part establishes consumer protections in connection with retail sales practices, solicitations, advertising, or offers of any insurance product or annuity to a consumer by:
(a) Any institution; or
(b) Any other person that is engaged in such activities at an office of the institution or on behalf of the institution.
As used in this part:
Affiliate means a company that controls, is controlled by, or is under common control with another company.
Company means any corporation, partnership, business trust, association or similar organization, or any other trust (unless by its terms the trust must terminate within twenty-five years or not later than twenty-one years and ten months after the death of individuals living on the effective date of the trust). It does not include any corporation the majority of the shares of which are owned by
Consumer means an individual who purchases, applies to purchase, or is solicited to purchase from you insurance products or annuities primarily for personal, family, or household purposes.
Control of a company has the same meaning as in section 3(w)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(5)).
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:
(1) Attempting to cause or causing or threatening another person physical harm, severe emotional distress, psychological trauma, rape, or sexual assault;
(2) 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;
(3) Subjecting another person to false imprisonment; or
(4) Attempting to cause or causing damage to property so as to intimidate or attempt to control the behavior of another person.
Electronic media includes any means for transmitting messages electronically between you and a consumer in a format that allows visual text to be displayed on equipment, for example, a personal computer monitor.
FDIC-supervised insured depository institution or institution means any State nonmember insured bank or State savings association for which the
Office means the premises of an institution where retail deposits are accepted from the public.
State savings association has the same meaning as in section (3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
Subsidiary has the same meaning as in section 3(w)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(4)).
You --(1) Means:
(i) An institution; or
(ii) Any other person only when the person sells, solicits, advertises, or offers an insurance product or annuity to a consumer at an office of the institution or on behalf of an institution.
(2) For purposes of this definition, activities on behalf of an institution include activities where a person, whether at an office of the institution or at another location sells, solicits, advertises, or offers an insurance product or annuity and at least one of the following applies:
(i) The person represents to a consumer that the sale, solicitation, advertisement, or offer of any insurance product or annuity is by or on behalf of the institution;
(ii) The institution refers a consumer to a seller of insurance products or annuities and the institution has a contractual arrangement to receive commissions or fees derived from a sale of an insurance product or annuity resulting from that referral; or
(iii) Documents evidencing the sale, solicitation, advertising, or offer of an insurance product or annuity identify or refer to the institution.
(a) Anticoercion and antitying rules. You may not engage in any practice that would lead a consumer to believe that an extension of credit, in violation of section 106(b) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972) in the case of a State nonmember insured bank and a foreign bank having an insured branch, or in violation of section 5(q) of the Home Owners' Loan Act (12 U.S.C. 1464(q)) in the case of a State savings association, is conditional upon either:
(1) The purchase of an insurance product or annuity 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 or annuity from an unaffiliated entity.
(b) Prohibition on misrepresentations generally. You may not engage in any practice or use any advertisement at any office of, or on behalf of, the institution or a subsidiary of the institution that could mislead any person or otherwise cause a reasonable person to reach an erroneous belief with respect to:
(1) The fact that an insurance product or annuity sold or offered for sale by you or any subsidiary of the institution is not backed by the Federal government or the institution, or the fact that the insurance product or annuity is not insured by the
(2) In the case of an insurance product or annuity that involves investment risk, the fact that there is an investment risk, including the potential that principal may be lost and that the product may decline in value; or
(3) In the case of an institution or subsidiary of the institution at which insurance products or annuities are sold or offered for sale, the fact that:
(i) The approval of an extension of credit to a consumer by the institution or subsidiary may not be conditioned on the purchase of an insurance product or annuity by the consumer from the institution or a subsidiary of the institution; and
(ii) The consumer is free to purchase the insurance product or annuity from another source.
(c) Prohibition on domestic violence discrimination. You may not sell or offer for sale, as principal, agent, or broker, any life or health insurance product if the status of the applicant or insured as a victim of domestic violence or as a provider of services to victims of domestic violence is considered as a criterion in any decision with regard to insurance underwriting, pricing, renewal, or scope of coverage of such product, or with regard to the payment of insurance claims on such product, except as required or expressly permitted under State law.
(a) Insurance disclosures. In connection with the initial purchase of an insurance product or annuity by a consumer from you, you must disclose to the consumer, except to the extent the disclosure would not be accurate, that:
(1) The insurance product or annuity is not a deposit or other obligation of, or guaranteed by, the institution or an affiliate of the institution;
(2) The insurance product or annuity is not insured by the
(3) In the case of an insurance product or annuity that involves an investment risk, there is investment risk associated with the product, including the possible loss of value.
(b) Credit disclosure. In the case of an application for credit in connection with which an insurance product or annuity is solicited, offered, or sold, you must disclose that the institution may not condition an extension of credit on either:
(1) The consumer's purchase of an insurance product or annuity from the institution or any of its affiliates; or
(2) The consumer's agreement not to obtain, or a prohibition on the consumer from obtaining, an insurance product or annuity from an unaffiliated entity.
(c) Timing and method of disclosures-- (1) In general. The disclosures required by paragraph (a) of this section must be provided orally and in writing before the completion of the initial sale of an insurance product or annuity to a consumer. The disclosure required by paragraph (b) of this section must be made orally and in writing at the time the consumer applies for an extension of credit in connection with which an insurance product or annuity is solicited, offered, or sold.
(2) Exception for transactions by mail. If a sale of an insurance product or annuity is conducted by mail, you are not required to make the oral disclosures required by paragraph (a) of this section. If you take an application for credit by mail, you are not required to make the oral disclosure required by paragraph (b) of this section.
(3) Exception for transactions by telephone. If a sale of an insurance product or annuity is conducted by telephone, you may provide the written disclosures required by paragraph (a) of this section by mail within 3 business days beginning on the first business day after the sale, excluding Sundays and the legal public holidays specified in 5 U.S.C. 6103(a). If you take an application for credit by telephone, you may provide the written disclosure required by paragraph (b) of this section by mail, provided you mail it to the consumer within three days beginning the first business day after the application is taken, excluding Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).
(4) Electronic form of disclosures. (i) Subject to the requirements of section 101(c) of the Electronic Signatures in Global and National Commerce Act (12 U.S.C. 7001(c)), you may provide the written disclosures required by paragraph (a) and (b) of this section through electronic media instead of on paper, if the consumer affirmatively consents to receiving the disclosures electronically and if the disclosures are provided in a format that the consumer may retain or obtain later, for example, by printing or storing electronically (such as by downloading).
(ii) Any disclosure required by paragraph (a) or (b) of this section that is provided by electronic media is not required to be provided orally.
(5) Disclosures must be readily understandable. The disclosures provided shall be conspicuous, simple, direct, readily understandable, and designed to call attention to the nature and significance of the information provided. For instance, you may use the following disclosures in visual media, such as television broadcasting, ATM screens, billboards, signs, posters and written advertisements and promotional materials, as appropriate and consistent with paragraphs (a) and (b) of this section:
(i) "NOT A DEPOSIT"
(ii) "NOT FDIC-INSURED"
(iii) "NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY"
(iv) "NOT GUARANTEED BY THE INSTITUTION"
(v) "
(6) Disclosures must be meaningful. (i) You must provide the disclosures required by paragraphs (a) and (b) of this section in a meaningful form. Examples of the types of methods that could call attention to the nature and significance of the information provided include:
(A) A plain-language heading to call attention to the disclosures;
(B) A typeface and type size that are easy to read;
(C) Wide margins and ample line spacing;
(D) Boldface or italics for key words; and
(E) Distinctive type size, style, and graphic devices, such as shading or sidebars, when the disclosures are combined with other information.
(ii) You have not provided the disclosures in a meaningful form if you merely state to the consumer that the required disclosures are available in printed material, but do not provide the printed material when required and do not orally disclose the information to the consumer when required.
(iii) With respect to those disclosures made through electronic media for which paper or oral disclosures are not required, the disclosures are not meaningfully provided if the consumer may bypass the visual text of the disclosures before purchasing an insurance product or annuity.
(7) Consumer acknowledgment. You must obtain from the consumer, at the time a consumer receives the disclosures required under paragraph (a) or (b) of this section, or at the time of the initial purchase by the consumer of an insurance product or annuity, a written acknowledgment by the consumer that the consumer received the disclosures. You may permit a consumer to acknowledge receipt of the disclosures electronically or in paper form. If the disclosures required under paragraph (a) or (b) of this section are provided in connection with a transaction that is conducted by telephone, you must:
(i) Obtain an oral acknowledgment of receipt of the disclosures and maintain sufficient documentation to show that the acknowledgment was given; and
(ii) Make reasonable efforts to obtain a written acknowledgment from the consumer.
(d) Advertisements and other promotional material for insurance products or annuities. The disclosures described in paragraph (a) of this section are required in advertisements and promotional material for insurance products or annuities unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the institution.
(a) General rule. An institution must, to the extent practicable, keep the area where the institution conducts transactions involving insurance products or annuities physically segregated from areas where retail deposits are routinely accepted from the general public, identify the areas where insurance product or annuity sales activities occur, and clearly delineate and distinguish those areas from the areas where the institution's retail deposit-taking activities occur.
(b) Referrals. Any person who accepts deposits from the public in an area where such transactions are routinely conducted in the institution may refer a consumer who seeks to purchase an insurance product or annuity to a qualified person who sells that 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.
An institution may not permit any person to sell or offer for sale any insurance product or annuity in any part of its office or on its behalf, unless the person is at all times appropriately qualified and licensed under applicable State insurance licensing standards with regard to the specific products being sold or recommended.
Appendix A to Part 343--Consumer Grievance Process
Any consumer who believes that any institution or any other person selling, soliciting, advertising, or offering insurance products or annuities to the consumer at an office of the institution or on behalf of the institution has violated the requirements of this part should contact the
PART 390--REGULATIONS TRANSFERRED FROM THE
2. The authority citation for part 390 is revised to read as follows:
Authority: 12 U.S.C. 1831y.
Subpart I--[Removed and Reserved]
3. Remove and reserve subpart I, consisting of SUBSEC 390.180 through 390.185, and appendix A.
Dated at
By order of the Board of Directors.
Assistant Executive Secretary.
[FR Doc. 2018-06163 Filed 3-30-18;
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