Magazine article American Banker

Comptroller Readies Regulatory Guidelines for Insurance Sales

Magazine article American Banker

Comptroller Readies Regulatory Guidelines for Insurance Sales

Article excerpt

The Office of the Comptroller of the Currency is preparing to issue an advisory letter within the next few weeks detailing how it will Washington supervise bank insurance sales.

OCC Chief Counsel Julie Williams said the agency is putting the final touches on the document, which will be presented to Comptroller Eugene Ludwig shortly for approval.

Ms. Williams declined to discuss the advisory. But sources said it addresses how state rules apply to banks, how banks should comply with anti-tying restrictions, how management should oversee insurance products, and how examiners should review a bank's insurance activities.

"This will be very helpful," said James McLaughlin, the director of regulatory and trust affairs at the American Bankers Association. "As banks begin to consider how to get into the insurance business, they will need to know what the comptroller expects of them and what kinds of limitations there might be on the location or sale of insurance."

According to sources familiar with the advisory letter, the OCC will require national banks to follow state licensing, training, and consumer protection laws. But the agency also will rule that national banks are exempt from state laws that attempt to interfere with the their ability to sell insurance, sources said. This is the standard the Supreme Court laid out in its recent Barnett decision.

"This is consistent with what they have been saying all along," Mr. McLaughlin said. "They don't want restrictions on a national bank's ability to exercise its authority."

The advisory letter also will include a discussion of the anti-tying rules, which generally prevent a bank from requiring a consumer to purchase a product in order to get a loan. The letter will require bankers to inform consumers that they do not need to purchase their insurance from the bank, according to these sources. It also will reiterate that banks cannot coerce consumers to buy insurance from them. …

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