May 2001

After a reprieve from the initial effective date of April 1, 2001, the final Consumer Protection Rules relating to the sale of insurance by financial institutions, promulgated jointly by the federal banking agencies, will become effective October 1, 2001. Although the Rules include some provisions previously applicable to financial institutions under the Interagency Statement on Retail Sales of Nondeposit Investment Products, such as physical segregation and limits on referral fees, these new regulations include increased restrictions and requirements and apply to a broader scope of activities.
For example, the Rules apply to offers, sales, solicitations or advertisements at any office where deposits are accepted, irrespective of whether the financial institution receives any benefit as a result. Additionally, specific disclosures must be made both verbally and in writing prior to the sale of an insurance product, and a written acknowledgment obtained from the consumer. A financial institution's loan officers should also be aware that the disclosures required under the new Rules apply to credit insurance in connection with credit applications.

Please contact Chuck Ferry at 717-233-5731 for a complete description of your responsibilities under the new Consumer Protection Rules and what you can be doing to prepare in advance of their effective date.