12 USC 1831x - Insurance customer protections

U.S Code last checked for updates: Apr 28, 2024

§ 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

(3)

Consultation and joint regulations

(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 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) 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

(ii)

Investment risk

(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

(D)

Meaningful disclosures

(E)

Adjustments for alternative methods of purchase

(F)

Consumer acknowledgment

(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

(2)

Requirements

Regulations prescribed pursuant to paragraph (1) shall include the following requirements:

(A)

Separate setting

(B)

Referrals

(C)

Qualification and licensing requirements

(e)

Domestic violence discrimination prohibition

(1)

In general

(2)

Scope of application

(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

(B)

Preemption

(i)

In general

(ii)

Considerations

(iii)

Federal preemption and ability of States to override Federal preemption

(h)

Non-discrimination against non-affiliated agents

(Sept. 21, 1950, ch. 967, § 2[47], as added Pub. L. 106–102, title III, § 305, Nov. 12, 1999, 113 Stat. 1410.)

cite as: 12 USC 1831x