[Congressional Record Volume 151, Number 18 (Thursday, February 17, 2005)]
[Senate]
[Page S1632]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENZI (for himself, Mrs. Clinton, Mr. Hagel, and Mr. 
        Schumer):
  S. 418. A bill to protect members of the Armed Forces from 
unscrupulous practices regarding sales of insurance, financial, and 
investment products; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. ENZI. Mr. President, I rise today with my colleague from New York 
to introduce the Military Personnel Financial Services Protection Act 
of 2005. This bill is needed to protect our military personnel and 
their families from unscrupulous financial products. Over the past 
year, it has become increasingly clear to many that the lack of 
oversight in this area has allowed certain individuals to push high 
cost financial products on unknowing military personnel. This practice 
must be stopped. Our soldiers and their families deserve much better, 
especially during a time when so many of them are serving at home and 
overseas to protect our freedom.
  The bill that we introduce today will halt completely the sale of a 
mutual fund-like product that charges a 50 percent sales commission 
against the first year of contributions by a military family. 
Currently, there are hundreds of mutual fund products available on the 
market that charge less than six percent. The excessive sales charges 
of these contractually based financial products make them susceptible 
to abusive and misleading sales practices.
  In addition, certain life insurance products are being offered to our 
service members disguised and marketed as investment products. These 
products provide very low death benefits while charging very high 
premiums, especially in the first few years. Many of these products are 
unsuitable for the insurance and investment needs of military families.
  One of the major problems with the sale of insurance products on 
military bases is the confusion of whether state insurance regulators 
or military base commanders are responsible for the oversight of sales 
agents. Typically, military base commanders will bar certain sales 
agents from a military base only to have the sales agents show up at 
other military facilities. Since there is no record of the bar, State 
insurance regulators have been unable to have adequate oversight of the 
individuals. The bill that we introduce today will solve that problem. 
It will state clearly that State insurance regulators have jurisdiction 
of the sale of insurance products on military bases.

  The bill will also urge State insurance regulators to work with the 
Department of Defense to develop life insurance product standards and 
disclosures. The Department of Defense will keep a list of individuals 
who are barred or banned from military bases due to abuse or 
unscrupulous sales tactics and to share that list with Federal and 
State insurance, securities and other relevant regulators.
  Finally, the bill that we are introducing today will protect our 
military families by preventing investment companies from issuing 
periodic payment plan certificates, the mutual fund-like investment 
product with extremely high first year costs. This type of financial 
instrument has been criticized by securities regulators since the late 
1960s.
  It should be noted that there are many upstanding financial and 
insurance companies that sell very worthwhile investment and insurance 
products to military families. They should be applauded for the fine 
job that they do in helping our military members and their families. 
This bill is targeted at the few who abuse the system and prey upon our 
military.
  Congress is fully aware of the dangers faced by our military 
personnel in keeping our country safe from harm. Likewise, we must do 
all that we can to arm our soldiers when they face the dangers of 
planning for their financial futures.
  I urge my colleagues to take up this bill immediately so that we can 
help our men and women in the military and their families.
                                 ______