Removal of Transferred OTS Regulations Regarding Consumer Protection in Sales of Insurance, 13843-13849 [2018-06163]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 83, Number 63 (Monday, April 2, 2018)]
[Rules and Regulations]
[Pages 13843-13849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06163]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 343 and 390

RIN 3064-AE49


Removal of Transferred OTS Regulations Regarding Consumer 
Protection in Sales of Insurance

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (``FDIC'') is 
adopting a final rule to rescind and remove from the Code of Federal 
Regulations the part entitled ``Consumer Protection in Sales of 
Insurance'' and to amend current FDIC regulations to make them 
applicable to state savings associations.

DATES: This final rule is effective on May 2, 2018.

FOR FURTHER INFORMATION CONTACT: Martha L. Ellett, Counsel, Legal 
Division, (202) 898-6765; John Jackwood, Senior Policy Analyst, 
Division of Depositor and Consumer Protection, (202) 898-3991.

SUPPLEMENTARY INFORMATION: Part 390, subpart I was included in the 
regulations that were transferred to the FDIC from the Office of Thrift 
Supervision (``OTS'') on July 21, 2011, in connection with the 
implementation of applicable provisions of title III of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (``Dodd-Frank Act''). 
The requirements for State savings associations in part 390, subpart I 
are substantively similar to the requirements in the FDIC's 12 CFR part 
343 (``part 343'') which is also entitled ``Consumer Protection in 
Sales of Insurance.''
    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 FDIC's current supervisory responsibilities as the 
appropriate Federal banking agency. The final rule also defines ``FDIC-
supervised insured depository institution or institution'' and ``State 
savings association.'' In the final rule, the FDIC also transfers an 
anticoercion and antitying provision from part 390, subpart I that is 
applicable to State savings associations.
    Upon removal of part 390, subpart I, the Consumer Protection in 
Sales of Insurance regulations applicable for all insured depository 
institutions for which the FDIC has been designated the appropriate 
Federal banking agency will be found at 12 CFR part 343.

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 July 21, 2011, the transfer date 
established by section 311 of the Dodd-Frank Act, codified at 12 U.S.C. 
5411, the powers, duties, and functions formerly performed by the OTS 
were divided among the FDIC, as to State savings associations, the 
Office of the Comptroller of the Currency (``OCC''), as to Federal 
savings associations, and the Board of Governors of the Federal Reserve 
System (``FRB''), as to savings and loan holding companies. Section 
316(b) of the Dodd-Frank Act, codified at 12 U.S.C. 5414(b), provides 
the manner of treatment for all orders, resolutions, determinations, 
regulations, and advisory materials that had been issued, made, 
prescribed, or allowed to become effective by the OTS. This section 
provides that if such materials were in effect on the day before the 
transfer date, they continue to be in effect and

[[Page 13844]]

are enforceable by or against the appropriate successor agency until 
they are modified, terminated, set aside, or superseded in accordance 
with applicable law by such successor agency, by any court of competent 
jurisdiction, or by operation of law.
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    \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.).
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    Section 316(c) of the Dodd-Frank Act, codified at 12 U.S.C. 
5414(c), further directed the FDIC and the OCC to consult with one 
another and to publish a list of the continued OTS regulations that 
would be enforced by the FDIC and the OCC, respectively. On June 14, 
2011, the FDIC's Board of Directors approved a ``List of OTS 
Regulations to be enforced by the OCC and the FDIC Pursuant to the 
Dodd-Frank Wall Street Reform and Consumer Protection Act.'' This list 
was published by the FDIC and the OCC as a Joint Notice in the Federal 
Register on July 6, 2011.\2\
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    \2\ 76 FR 39247 (July 6, 2011).
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    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 FDIC's existing authority to 
issue regulations under the Federal Deposit Insurance Act (``FDI Act'') 
and other laws as the ``Appropriate Federal Banking Agency'' or under 
similar statutory terminology. Section 312(c) of the Dodd-Frank Act 
amended the definition of ``Appropriate Federal Banking Agency'' 
contained in section 3(q) of the FDI Act, 12 U.S.C. 1813(q), to add 
State savings associations to the list of entities for which the FDIC 
is designated as the ``appropriate Federal banking agency.'' As a 
result, when the FDIC acts as the designated ``Appropriate Federal 
Banking Agency'' (or under similar terminology) for State savings 
associations, as it does here, the FDIC is authorized to issue, modify 
and rescind regulations involving such associations, as well as for 
State nonmember banks and insured branches of foreign banks.
    As noted, on June 14, 2011, pursuant to this authority, the FDIC's 
Board of Directors reissued and redesignated certain transferring 
regulations of the former OTS. These transferred OTS regulations were 
published as new FDIC regulations in the Federal Register on August 5, 
2011.\3\ When it republished the transferred OTS regulations as new 
FDIC regulations, the FDIC specifically noted that its staff would 
evaluate the transferred OTS rules and might later recommend 
incorporating the transferred OTS regulations into other FDIC rules, 
amending them, or rescinding them, as appropriate.
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    \3\ 76 FR 47652 (Aug. 5, 2011).
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    One of the OTS rules transferred to the FDIC governed OTS oversight 
of consumer protections for depository institution sales of insurance. 
The OTS rule, formerly found at 12 CFR part 536, was transferred to the 
FDIC with only nominal changes and is now found in the FDIC's rules at 
part 390, subpart I, entitled ``Consumer Protection in Sales of 
Insurance.'' Before the transfer of the OTS rules and continuing today, 
the FDIC's rules contained part 343, entitled ``Consumer Protection in 
Sales of Insurance,'' a rule governing FDIC oversight of consumer 
protection regulations that apply to retail sales practices, 
solicitations, advertising, or offers of any insurance product with 
respect to insured depository institutions for which the FDIC has been 
designated the appropriate Federal banking agency.
    After careful review and comparison of part 390, subpart I, and 
part 343, the FDIC is adopting a final rule to rescind part 390, 
subpart I, because, as discussed below, it is substantively redundant 
to existing part 343 and simultaneously finalize technical conforming 
edits to the existing rule.

FDIC's Existing 12 CFR Part 343 and Former OTS's Part 536 (Transferred, 
in Part, to FDIC's Part 390, Subpart I)

    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 FDIC, the OTS, the OCC, and the FRB 
(collectively the ``Federal banking agencies'') to include provisions 
specifically relating to sales practices, disclosures and advertising, 
the physical separation of banking and nonbanking activities, and 
domestic violence discrimination.\8\ On December 4, 2000, pursuant to 
section 305 of the GLB Act,\9\ the Federal banking agencies published a 
joint final rule \10\ to implement consumer protection in sales of 
insurance provisions of section 47 of the FDI Act.
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    \4\ Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat. 1338 
(1999).
    \5\ 12 U.S.C. 1831x.
    \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 FDIC, and a savings association in the case of the 
OTS. 65 FR 75822 fn. 1 (Dec. 4, 2000).
    \7\ 12 U.S.C. 1831x(a)(1)(A).
    \8\ 12 U.S.C. 1831x.
    \9\ 12 U.S.C. 1831x(a)(3).
    \10\ 65 FR 75822 (Dec. 4, 2000).
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    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\
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    \11\ 12 U.S.C. 1831x(a)(1).
    \12\ 12 U.S.C. 1831x(a)(3).
    \13\ 65 FR 75822 (Dec. 4, 2000).
    \14\ 65 FR 75822, 75824 (Dec. 4, 2000). A ``covered person'' or 
``you'' means ``any depository institution or any other person 
selling, soliciting, advertising, or offering insurance products or 
annuities to a consumer at an office of the institution or on behalf 
of the institution. A `covered person' includes any person, 
including a subsidiary or other affiliate, if that person or one of 
its employees sells, solicits, advertises, or offers insurance 
products or annuities at an office of an institution or on behalf of 
an institution. 65 FR 75824 (Dec. 4, 2000). See also 12 CFR 
343.20(j)(1) and 12 CFR 390.181.
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    The scope of part 343 in the FDIC's regulations and of part 390, 
subpart I in the OTS's regulations is substantively similar. The FDIC 
regulations apply to any bank \15\ or any other person that is engaged 
in such activities at an office of the bank or on behalf of the 
bank.\16\ Similarly, the OTS regulations apply to any State savings 
association or any other person that is engaged in such activities at 
an office of a State savings association or on behalf of a State 
savings association.\17\ In the FDIC's scope provisions, any other 
person includes subsidiaries \18\ because only subsidiaries that are 
selling insurance products or annuities at an office of the institution 
or acting on behalf of the depository institution as defined in the

[[Page 13845]]

rules would be subject to the requirements of the rules.\19\ The OTS 
regulation specifically states that its regulation applies to 
subsidiaries of a State savings association only to the extent that it 
sells, solicits, advertises, or offers insurance products or annuities 
at an office of a State savings association or on behalf of a State 
savings association.\20\ This OTS provision will not be carried over to 
the FDIC's part 343 because it is redundant and unnecessary, since the 
FDIC scope provision already includes subsidiaries within its 
definition.\21\ The rule specifically states that a covered person (or 
you) includes any person including a subsidiary or other affiliate if 
that person or one of its employees sells, solicits, advertises, or 
offers insurance products or annuities at an office of an institution 
or on behalf of an institution.\22\
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    \15\ Bank means an FDIC-insured, state-chartered commercial or 
savings bank that is not a member of the Federal Reserve System and 
for which the FDIC is the appropriate federal banking agency 
pursuant to section 3(q) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q)). 12 CFR 343.20(b).
    \16\ 12 CFR 343.10.
    \17\ 12 CFR 390.180(a)(1), (2).
    \18\ See 65 FR 75822, 75823 (Dec. 4, 2000).
    \19\ 65 FR 75822, 75823 (Dec. 4, 2000) (footnote omitted).
    \20\ 12 CFR 390.180(b).
    \21\ 12 CFR 343.10.
    \22\ 65 FR 75822, 75824 (Dec. 4, 2000) (italics added).
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    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 
FDIC's part 390, subpart I, are substantively similar to the current 
FDIC regulations codified at 12 CFR part 343. By amending part 343 to 
encompass State savings associations and rescinding part 390, subpart 
I, the FDIC will streamline its regulations and reduce redundancy.
    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 FDIC does not 
supervise savings and loan or bank holding companies for purposes of 
this rule. Section 312 of the Dodd-Frank Act \23\ divides and transfers 
the functions of the former OTS to the FDIC, OCC, and FRB by amending 
section 1813(q) of the FDI Act. Specifically, section 312 transfers the 
former OTS's power to regulate State savings associations to the FDIC, 
while it transfers the power to regulate savings and loan holding 
companies to the FRB.\24\ As a result, whereas the former OTS part 536 
applied to savings associations, their subsidiaries and their 
affiliates, including savings and loan holding companies,\25\ upon 
transfer of part 536 to FDIC's part 390, subpart I, only the authority 
over State savings associations and their subsidiaries and other 
affiliates was transferred to the FDIC for purposes of this rule.\26\ 
The FRB currently has jurisdiction over the regulation and supervision 
of consumer protections in connection with retail insurance sales 
practices as it applies to affiliates, including savings and loan 
holding companies of State savings associations.\27\ For this reason, 
the existing references to affiliates in part 390, subpart I, are not 
transferred to part 343 of the FDIC rules.
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    \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).
    \24\ 12 U.S.C. 5412.
    \25\ 12 CFR 536.1.
    \26\ 12 CFR 390.180.
    \27\ 12 CFR part 208, subpart H.
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    After careful comparison of the FDIC's part 343 with the 
transferred OTS rule in part 390, subpart I, the FDIC has concluded 
that the transferred OTS rules governing consumer protection in sales 
of insurance are substantively redundant. Based on the foregoing, the 
FDIC is adopting a final rule to rescind and remove from the Code of 
Federal Regulations the transferred OTS rules located at part 390, 
subpart I, and to make technical and conforming changes to part 343 to 
incorporate State savings associations.

II. Proposed Rule

    The functions of the former OTS that were transferred to the FDIC, 
section 316(b)(3) of the Dodd-Frank Act, 12 U.S.C. 5414(b)(3), in 
pertinent part, provide that the former OTS's regulations will be 
enforceable by the FDIC until they are modified, terminated, set aside, 
or superseded in accordance with applicable law. After reviewing the 
rules currently found in part 390, subpart I, on November 15, 2016 the 
FDIC published a Notice of Proposed Rulemaking (``NPR'' or ``Proposed 
Rule'') to (1) rescind part 390, subpart I, in its entirety; (2) modify 
to the scope of part 343 to include State savings associations and 
their subsidiaries to conform to and reflect the scope of FDIC's 
current supervisory responsibilities as the appropriate Federal banking 
agency for State savings associations; (3) delete the definition of 
``bank'' and replace it with a definition of ``FDIC-supervised insured 
depository institution or institution'', which means ``any State 
nonmember insured bank or State savings association for which the 
Federal Deposit Insurance Corporation is the appropriate Federal 
banking agency pursuant to section 3(q) of the Federal Deposit 
Insurance Act (12 U.S.C. 1813(q));'' (4) add a new subsection (i), 
which would define ``State savings association'' as having ``the same 
meaning as in section 3(b)(3) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(b)(3));'' (5) transfer an anticoercion and antitying 
provision from part 390, subpart I that is applicable to State savings 
associations to part 343; and (6) make conforming technical edits 
throughout, including replacing the term ``institution'' in place of 
``bank'' throughout the rule where necessary.
    Under the NPR, oversight of consumer protection in sales of 
insurance in part 343 would apply to all FDIC-supervised institutions, 
including State savings associations, and part 390, subpart I, would be 
removed because it is largely redundant of the rules found in part 343. 
Rescinding part 390, subpart I, would serve to streamline the FDIC's 
rules and eliminate unnecessary regulations.

III. Comments

    The FDIC issued the NPR with a 60-day comment period which closed 
on January 20, 2017. The FDIC received no comments on its Proposed 
Rule. The final rule (``Final Rule'') is adopted as proposed without 
changes.

IV. Explanation of the Final Rule

    As discussed in the NPR, part 390, subpart I is substantively the 
same as the requirements in part 343 and therefore is redundant. The 
Final Rule removes and rescinds 12 CFR part 390, subpart I in its 
entirety. This will serve to streamline the FDIC's rules and eliminate 
unnecessary regulation.
    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 
FDIC's current supervisory responsibilities as the appropriate Federal 
banking agency for State savings associations. The Final Rule also 
deletes the definition of ``bank'' and replaces it with a definition of 
``FDIC-supervised insured depository institution or institution'' 
defined as ``any State nonmember insured bank or State savings 
association for which the Federal Deposit Insurance Corporation is the 
appropriate Federal banking agency pursuant to section 3(q) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(q)).'' As in the Proposed 
Rule, the Final Rule adds a new subsection (i), which would define 
``State savings association'' as ``having the same meaning as in 
section 3(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(b)(3)).'' The Final Rule, as the NPR, transfers an anticoercion 
and antitying provision that is applicable to State savings 
associations from part 390, subpart I, to part 343. As in the

[[Page 13846]]

Proposed Rule, the Final Rule also makes conforming technical edits 
throughout, including using the term ``institution'' in place of 
``bank'' throughout the rule where necessary.

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 FDIC may not conduct or 
sponsor, and the respondent is not required to respond to, an 
information collection unless it displays a currently valid Office of 
Management and Budget (``OMB'') control number.
    The Final Rule would rescind and remove from the FDIC regulations 
part 390, subpart I. Part 390, subpart I was transferred with only 
nominal changes to the FDIC from the OTS when the OTS was abolished by 
title III of the Dodd-Frank Act and is substantively similar to the 
FDIC's existing part 343 regarding consumer protection in the sales of 
insurance by depository institutions. The information collections 
contained in part 343 are cleared by OMB under the FDIC's Insurance 
Sales Consumer Protections information collection (OMB Control No. 
3064-0140). The FDIC reviewed its burden estimates for the collection 
at the time it assumed responsibility for supervision of State savings 
associations transferred from the OTS and determined that no changes to 
the burden estimates were necessary. The Final Rule would not revise 
the Insurance Sales Consumer Protections information collection under 
OMB Control No. 3064-0140 or create any new information collection 
pursuant to the PRA. Consequently, no submission will be made to the 
Office of Management and Budget for review. In the Proposed Rule, the 
FDIC requested comment on its conclusion that the NPR did not revise 
the Insurance Sales Consumer Protections information collection 3064-
0140. No comments were received.
    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 ``FDIC-supervised insured depository institution 
or institution'' and ``State savings association;'' (3) transfers an 
anticoercion and antitying provision from part 390, subpart I, that is 
applicable to State savings associations to part 343; and (4) makes 
conforming technical edits throughout. These measures clarify that 
State savings associations, as well as State nonmember banks, are 
subject to part 343. With respect to part 343, the Final Rule does not 
revise any existing, or create any new information collection pursuant 
to the PRA. Consequently, no submission will be made to the Office of 
Management and Budget for review. The FDIC requested comment on its 
conclusion that this aspect of the NPR did not create a new or revise 
and existing information collection. No comments on this issue were 
received.

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 Small Business 
Administration to include banking organizations with total assets of 
less than or equal to $550 million).\28\ However, a regulatory 
flexibility analysis is not required if the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities, and publishes its certification and a short 
explanatory statement in the Federal Register together with the rule. 
For the reasons provided below, the FDIC certifies that the Final Rule 
would not have a significant economic impact on a substantial number of 
small entities.
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    \28\ 5 U.S.C. 601 et seq.
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    As discussed in the NPR, Part 390, subpart I, was transferred to 
the FDIC from OTS part 536, which governed consumer protections for 
depository institution sales of insurance. OTS part 536 had been in 
effect since 2001 and all State savings associations were required to 
comply with it. Because it is substantially the same as existing part 
343 of the FDIC's rules and therefore redundant, the FDIC is rescinding 
and removing the transferred regulation now located in part 390, 
subpart I, as proposed in the NPR. As a result, all FDIC-supervised 
institutions--including State savings associations and their 
subsidiaries--would be required to comply with part 343 if they are 
selling, soliciting, advertising, or offering any insurance product. 
Because all State savings associations and their subsidiaries have been 
required to comply with substantially similar consumer protection rules 
if they engaged in sales of insurance since 2001,\29\ the Final Rule 
would not place additional requirements or burdens on any State savings 
association irrespective of its size. Therefore, the Final Rule would 
not have a significant impact on a substantial number of small 
entities.
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    \29\ 65 FR 75822 (Dec. 4, 2000). The final rule became effective 
April 1, 2001.
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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. 801 et seq. As required by 
SBREFA, the FDIC will submit the Final Rule and other appropriate 
reports to Congress and the Government Accountability Office for 
review.

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 January 1, 2000. In the NPR, 
the FDIC invited comments on whether the NPR was clearly stated and 
effectively organized, and how the FDIC might make it easier to 
understand. No comments on this issue were received. Although the FDIC 
did not receive any comments, the FDIC sought to present the Final Rule 
in a simple and straightforward manner.

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 FDIC is required to review all 
of its regulations, at least once every 10 years, in order to identify 
any outdated or otherwise unnecessary regulations imposed on insured 
institutions.\30\ The FDIC, along with the other federal banking 
agencies, submitted a Joint Report to Congress on March 21, 2017 
(``EGRPRA Report'') discussing how the review was conducted, what has 
been done to date to address regulatory burden, and further measures we 
will take to address issues that were identified. As noted in the 
EGRPRA Report, the FDIC is continuing to streamline and clarify its 
regulations through the OTS rule integration process. By removing 
outdated or unnecessary regulations, such as part 390, subpart I, and 
modifying part 343, this rule complements other actions the FDIC has 
taken, separately and with the other federal banking agencies, to 
further the EGRPRA mandate.
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    \30\ Public Law 104-208, 110 Stat. 3009 (1996).
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E. Riegle Community Development and Regulatory Improvement Act of 1994

    The Riegle Community Development and Regulatory Improvement Act of

[[Page 13847]]

1994 (RCDRIA) requires the FDIC, in determining the effective date and 
administrative compliance requirements for new regulations that impose 
additional reporting, disclosure or other requirements on insured 
depository institutions to consider, consistent with the principles of 
safety and soundness and the public interest, any administrative 
burdens that such regulations would place on depository institutions, 
including small depository institutions, as well as the benefits of 
such regulations.
    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.
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    \31\ 12 U.S.C. 4802.
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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 Federal Deposit Insurance Corporation is amending 12 CFR parts 343 
and 390 as follows:

0
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.


Sec.  343.10  Purpose and scope.

    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.


Sec.  343.20   Definitions.

    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 the United 
States or by any State, or a qualified family partnership, as defined 
in section 2(o)(10) of the Bank Holding Company Act of 1956, as amended 
(12 U.S.C. 1841(o)(10)).
    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 Federal Deposit Insurance Corporation is the appropriate Federal 
banking agency pursuant to section 3(q) of the Federal Deposit 
Insurance Act (12 U.S.C. 1813(q)).
    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.


Sec.  343.30  Prohibited practices.

    (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

[[Page 13848]]

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 Federal Deposit 
Insurance Corporation;
    (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.


Sec.  343.40  What you must disclose.

    (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 Federal 
Deposit Insurance Corporation (FDIC) or any other agency of the United 
States, the institution, or (if applicable) an affiliate of the 
institution; and
    (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) ``MAY GO DOWN IN VALUE''
    (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.

[[Page 13849]]

    (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.


Sec.  343.50   Where insurance activities may take place.

    (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.


Sec.  343.60   Qualification and licensing requirements for insurance 
sales personnel.

    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 Division of Depositor and Consumer Protection, Consumer 
Response Center, Federal Deposit Insurance Corporation, at the 
following address: 1100 Walnut Street, Box #11, Kansas City, MO 64106, 
or telephone 1-877-275-3342, or FDIC Electronic Customer Assistance 
Form at https://www5.fdic.gov/starsmail/index.asp.

PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT 
SUPERVISION

0
2. The authority citation for part 390 is revised to read as follows:

    Authority:  12 U.S.C. 1831y.

Subpart I--[Removed and Reserved]

0
3. Remove and reserve subpart I, consisting of Sec. Sec.  390.180 
through 390.185, and appendix A.

    Dated at Washington, DC, on March 20, 2018.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. 2018-06163 Filed 3-30-18; 8:45 am]
 BILLING CODE 6714-01-P