Current through Register 1531, September 27, 2024
(1) A Bank shall be
permitted to conduct insurance sales activities at the main office or at any
branch thereof.
(2) A Bank must, to
the extent practicable, keep the area where the Bank conducts insurance sales
activities physically segregated from areas where retail deposits are routinely
accepted from the general public. A Bank must identify the areas where
insurance sales activities occur, and clearly delineate and distinguish those
areas from the areas where the Bank's retail deposit-taking activities occur.
(a) A State Bank, State-chartered Credit
Union or Lender may obtain a waiver for the requirement of physical separation
of transactions involving insured deposits or extensions of credit and
insurance sales activities from the Commissioner of Banks pursuant to
209
CMR 49.06(4):
Insurance Sales on Bank Premises. If a State Bank or Lender
obtains such a waiver from the Division of Banks, it shall promptly forward a
copy of the order approving the waiver to the Division.
(b) With respect to a Federal Bank or Federal
Credit Union, the Commissioner, in his or her discretion, may waive the
requirement under 211 CMR 142.05(2) for the physical separation of transactions
involving insured deposits or extensions of credit and insurance sales
activities upon a demonstration by a Federal Bank or Federal Credit Union that
space considerations, such as the size or design of said bank premises,
preclude such separation. The burden is upon the applicant Federal Bank or
Federal Credit Union to demonstrate that size, design, landmark status,
National Register of Historic Places designation, site impediments, local
zoning requirements, building codes, fire codes or other relevant
considerations warrant the granting of a waiver.
1. The following conditions shall apply to
any waiver granted under 211 CMR 142.05(2)(b):
a. Common areas may be permitted for banking
and credit transactions and insurance purposes if physical constraints
warranting such condition are satisfactorily demonstrated by a Federal Bank's
or Federal Credit Union's waiver application.
b. In any instance where such waiver is
granted, a Federal Bank or Federal Credit Union employee, licensed as an
insurance producer, shall not, in any manner involving the application by a
customer for an extension of credit by said bank or credit union, act as the
representative of the Federal Bank or Federal Credit Union both with respect to
said application and with respect to the solicitation and sale of insurance
products to said customer, whether or not such insurance is required for the
extension of credit.
c. It shall be
the responsibility of a Federal Bank or Federal Credit Union to institute
procedures to eliminate customer misunderstanding or confusion as to the
distinction between such insurance products and other bank functions, and to
prevent any misrepresentation thereof if a waiver is granted.
d. The Commissioner, in his or her
discretion, may impose such other conditions as may be deemed necessary to
effectuate the purposes of 211 CMR 142.05(2).
e. The Commissioner, in his or her
discretion, may subject a waiver application under 211 CMR 142.05(2)(b) to such
notice and hearing as may be required.
2. Notwithstanding 211 CMR 142.05(2)(b), any
Federal Bank premises constructed, purchased, leased or acquired by a Federal
Bank on or after September 1, 1998, or on or after June 20, 2003 for a Federal
Credit Union subject to M.G.L. c. 171, § 75B, for the conduct of its
authorized business, including the solicitation and sale of insurance, shall
not be eligible for the waiver provided for herein, unless said acquisition
results from a merger, consolidation or purchase of assets pursuant to federal
law.
3. Applications for waivers
shall be available for public inspection from the Division upon request unless
the information is exempt from disclosure under M.G.L. c. 66, § 10, and
M.G.L. c. 4, § 7, cl. 26. Decisions approving or denying such applications
shall be in writing and shall be available for public inspection from the
Division upon request.
(3) Insurance sales activities conducted at
the main office or at any branch location of a Bank shall be conducted only by
insurance producers licensed pursuant to M.G.L. c. 175, § 162I. Unlicensed
personnel who accept deposits from the public in an area where such
transactions are routinely conducted in the Bank may refer a customer who seeks
to purchase an insurance product to a licensed insurance producer of the Bank
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. Unlicensed Bank personnel shall
not discuss specific insurance policy terms and conditions.
(4) A Bank is prohibited from tying the
availability and extension of credit by a Bank to the purchase of insurance
products from said Bank in violation of M.G.L. c. 176D, § 4, or 12 U.S.C.
§§ 1971 through 1978 and its implementing regulations promulgated by
the Board of Governors of the Federal Reserve System.
(5) A Bank may not engage in any practice or
use any advertisement at any office of, or on behalf of, the Bank that could
mislead any consumer or otherwise cause a reasonable person to reach an
erroneous belief with respect to:
(a) The
fact that an insurance product sold or offered for sale by the Bank is not
backed by the Federal government or the Bank, or the fact that the insurance
product is not insured by the Federal Deposit Insurance Corporation or the
National Credit Union Administration or any other type of deposit insurance,
are not an obligation of or guaranteed by the Bank, and may be subject to
risk;
(b) In the case of an
insurance product 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
(c) The fact that the approval of an
extension of credit to a customer by the Bank may not be conditioned on the
purchase of an insurance product by the customer from the Bank; and the
customer is free to purchase the insurance product from another
source.
(6) A Bank,
through its licensed insurance producers, shall disclose in writing to a
potential insurance customer that:
(a) the
insurance products which are available are not deposits of the Bank, are not
protected by the Federal Deposit Insurance Corporation, the National Credit
Union Administration or any other type of deposit insurance, are not an
obligation of or guaranteed by the Bank, and may be subject to risk;
(b) any insurance required as a condition of
the extension of credit by the Bank need not be purchased from the Bank but
may, without affecting the approval of the application for an extension of
credit, be purchased from an insurance producer or insurance company of the
customer's choice; and
(c) the
customer may file any complaints with the Office of Consumer Affairs, as
provided in
211 CMR
142.09(4).
(7)
(a) In the instance of an application to a
Bank for an extension of credit in connection with which an insurance product
is solicited, offered, or sold, the Bank must make the disclosures required
under 211 CMR 142.05(6) orally and in writing at the time the consumer applies
for an extension of credit.
(b) If
an application for credit is taken by mail, the Bank is not required to make
the oral disclosure required by 211 CMR 142.05(7)(a).
(c) If an application for credit is taken by
telephone, the Bank may provide the written disclosure required by 211 CMR
142.05(7)(a) by mail, provided it is mailed to the customer within three days
beginning the first business day after the application is taken, excluding
Sundays and the legal public holidays specified under federal and state
laws.
(d) Subject to the
requirements of § 101(c) of the Electronic Signatures in Global
and National Commerce Act ( 12 U.S.C. 7001(c)) and the
Uniform Electronic Transactions Act, M.G.L. c. 110G, the Bank
may provide the written disclosures required by 211 CMR 142.05(7)(c) through
electronic media instead of on paper, if the customer 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 downloading). Any disclosure required by 211
CMR 142.05(7)(a) that is provided by electronic media is not required to be
provided orally.
(8)211
CMR 142.05(7) shall not apply in situations where a Bank contacts a consumer in
the course of direct or mass marketing of insurance products to a group of
persons in a manner that bears no relation to any such person's loan
application or credit decision.
(9)
Rebates shall be regulated pursuant to M.G.L. c. 175, §§ 182 through
184 and M.G.L. c. 176D, § 3(8).
(10) The disclosure required by 211 CMR
142.05(6)(a) shall not apply to a Lender that does not accept
deposits.
(11) The disclosures
required by 211 CMR 142.05 shall be provided in writing and receipt thereof
shall be acknowledged in writing by the customer. A copy of all disclosure
forms shall be kept in the records of the Bank.
