Magazine article American Banker

OCC Drafting Guidelines for Platform Fund Sales

Magazine article American Banker

OCC Drafting Guidelines for Platform Fund Sales

Article excerpt

THE OFFICE OF THE COMPTROLLER of the Currency is developing guidelines for banks that are licensing platform employees to sell mutual funds and annuities, an agency official said this week.

The guidelines will center on how banks should disclose the role of these "dual employees" to their customers, according to Wallace S. Nathan, head of the agency's bank operations and assets division.

Mr. Nathan said at least one bank, which he declined to name, has sought guidelines on the practice, in which investment sales representatives are licensed by a brokerage firm but compensated primarily or wholly by a bank.

The new standards will take the same "common sense approach" as the joint guidelines issued recently by the four federal bank regulatory agencies, he told the Financial Institutions Insurance Association's annual convention in Washington.

Emphasizes Directives

The joint guidelines direct banks to clearly explain the differences between traditional bank products and newer offerings, like mutual funds, Mr. Nathan noted.

Although solid numbers are hard to come by, the practice of maintaining dual sales forces is growing at banks. First Union Corp., for instance, is in the process of licensing 2,600 bank employees as mutual fund sales representatives.

"The reason for doing it that way is it gives the bank day-to-day control over the broker's activities - things like firing them if they are bad," said David Nadig, senior consultant at Cerulli Associates, Boston. …

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