[Congressional Record Volume 151, Number 62 (Thursday, May 12, 2005)]
[Senate]
[Pages S5158-S5160]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. CLINTON (for herself and Ms. Collins):
  S. 1028. A bill to amend title 10, United States Code, to enhance the 
protection of members of the Armed Forces and their spouses from 
unscrupulous financial services sales practices through increased 
consumer education, and for other purposes, to the Committee on Armed 
Services.
  Mrs. CLINTON. Mr. President, today I am introducing the Military 
Personnel Financial Services Education Act of 2005. Senator Collins, my 
colleague on the Armed Services Committee, has agreed to cosponsor this 
legislation. This bill will directly address a problem that has plagued 
military servicemen and women for years: a lack of general knowledge 
about the insurance and other financial services available to them. 
This deficiency in information has led to many of our brave men and 
women in uniform being taken advantage of by unscrupulous companies 
that have targeted and preyed on junior members of our military.
  Last year, a series of articles in the New York Times uncovered a 
serious problem: there were a number of companies using misleading 
sales practices to sell expensive life insurance policies to Iraq-bound 
recruits and other uniformed personnel. These articles led to 
investigations by the Department of Justice, reports by the GAO, and 
legislation by Congress. Earlier this year, I joined with Senator Enzi 
to introduce the Military Personnel Financial Services Protection Act. 
That legislation goes a long way toward tracking unscrupulous 
companies, and eliminating investment schemes which take advantage of 
our men and women in uniform.
  But we also need to address our more fundamental responsibilities to 
our

[[Page S5159]]

servicemen and women, and their families, to ensure that we provide 
them with adequate financial education so that they can make informed 
decisions about their future.
  This bill will require the Department of Defense to provide consumer 
education for members of the armed forces and their spouses. It 
instructs the Secretary of Defense to carry out a comprehensive 
education program for military members regarding public and private 
financial services, including life insurance and the marketing 
practices of these services, available to them. This education will be 
institutionalized in the initial and recurring training for members of 
the military.
  This bill also requires that counseling services on these issues be 
made available, upon request, to members and their spouses. I think it 
is very important to include the spouses in this program, because we 
all know that investment decisions should be made as a family. Too many 
times, a military spouse has to make these decisions alone, while their 
husband or wife is deployed. This bill will require a permanent, 
trained counselor at military bases with at least 750 assigned 
personnel, and a part-time, equally capable counselor available at 
smaller bases with less than 750. By our calculations, this means about 
230 installations will have full-time counselors.
  Finally, regarding life insurance, this bill will take existing 
legislation and DoD policy one more step in the military member's 
favor. During counseling of members or spouses regarding life 
insurance, counselors must include information on the availability of 
Servicemembers' Group Life Insurance--SGLI--as well as other available 
products. It requires that any enlisted member in the grades of E1-E4 
must provide confirmation that they have received counseling from their 
approved counselor or commander before entering into any new contract 
with a private sector life insurer. Our legislation will keep the 
current rule of a 7 day waiting period for allotments to take effect to 
facilitate time for counseling. Existing policies will not be impacted 
by our legislation.
  I am pleased to be working on this issue with Senator Collins, my 
colleague on the Armed Services Committee, who has taken such a strong 
interest in ensuring proper financial education for our servicemembers.
  In closing, I want to reiterate the importance of this bill to 
military families. If implemented, this legislation will ensure our 
military families are fully equipped to make informed decisions that 
will best meet their financial and insurance needs. In my view, this is 
a provision long overdue. Thank you.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1028

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Military Personnel Financial 
     Services Education Act of 2005''.

     SEC. 2. CONSUMER EDUCATION FOR MEMBERS OF THE ARMED FORCES 
                   AND THEIR SPOUSES ON INSURANCE AND OTHER 
                   FINANCIAL SERVICES.

       (a) Education and Counseling Requirements.--
       (1) In general.--Chapter 50 of title 10, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 992. Consumer education: financial services

       ``(a) Requirement for Consumer Education Program for 
     Members.--(1) The Secretary concerned shall carry out a 
     program to provide comprehensive education to members of the 
     armed forces under the jurisdiction of the Secretary on--
       ``(A) financial services that are available under law to 
     members;
       ``(B) financial services that are routinely offered by 
     private sector sources to members;
       ``(C) practices relating to the marketing of private sector 
     financial services to members;
       ``(D) such other matters relating to financial services 
     available to members, and the marketing of financial services 
     to members, as the Secretary considers appropriate; and
       ``(E) such other financial practices as the Secretary 
     considers appropriate.
       ``(2) Training under this subsection shall be provided to 
     members as--
       ``(A) a component of the members' initial entry training;
       ``(B) a component of each level of the members' 
     professional development training that is required for 
     promotion; and
       ``(C) a component of periodically recurring required 
     training that is provided for the members at military 
     installations.
       ``(3) The training provided at a military installation 
     under paragraph (2)(C) shall include information on any 
     financial services marketing practices that are particularly 
     prevalent at that military installation and in the vicinity.
       ``(b) Counseling for Members and Spouses.--(1) The 
     Secretary concerned shall provide counseling on financial 
     services to each member of the armed forces under the 
     jurisdiction of the Secretary.
       ``(2) The Secretary concerned shall, upon request, provide 
     counseling on financial services to the spouse of any member 
     of the armed forces under the jurisdiction of the Secretary.
       ``(2) The Secretary concerned shall provide counseling on 
     financial services under this subsection as follows:
       ``(A) In the case of members, and the spouses of members, 
     assigned to a military installation to which at least 750 
     members of the armed forces are assigned, through a full-time 
     financial services counselor at such installation.
       ``(B) In the case of members, and the spouses of members, 
     assigned to a military installation other than an 
     installation described in subparagraph (A), through such 
     mechanisms as the Secretary considers appropriate, including 
     through the provision of counseling by a member of the armed 
     forces in grade E-7 or above, or a civilian, at such 
     installation who provides such counseling as a part of the 
     other duties performed by such member or civilian, as the 
     case may be, at such installation.
       ``(3) Each financial services counselor under paragraph 
     (2)(A), and each individual providing counseling on financial 
     services under paragraph (2)(B), shall be an individual who, 
     by reason of education, training, or experience, is qualified 
     to provide helpful counseling to members of the armed forces 
     and their spouses on financial services and marketing 
     practices described in subsection (a)(1). Such individual may 
     be a member of the armed forces or an employee of the Federal 
     Government.
       ``(4) The Secretary concerned shall take such action as is 
     necessary to ensure that each financial services counselor 
     under paragraph (2)(A), and each individual providing 
     counseling on financial services under paragraph (2)(B), is 
     free from conflicts of interest relevant to the performance 
     of duty under this section and, in the performance of that 
     duty, is dedicated to furnishing members of the armed forces 
     and their spouses with helpful information and counseling on 
     financial services and related marketing practices.
       ``(5) The Secretary concerned may authorize financial 
     services counseling to be provided to members of a unit of 
     the armed forces by unit personnel under the guidance and 
     with the assistance of a financial services counselor under 
     paragraph (2)(A) or an individual providing counseling on 
     financial services under paragraph (2)(B), as applicable.
       ``(c) Life Insurance.--(1) In counseling a member of the 
     armed forces, or spouse of a member of the armed forces, 
     under this section regarding life insurance offered by a 
     private sector source, a financial services counselor under 
     subsection (b)(2)(A), or an individual providing counseling 
     on financial services under subsection (b)(2)(B), shall 
     furnish the member or spouse, as the case may be, with 
     information on the availability of Servicemembers' Group Life 
     Insurance under subchapter III of chapter 19 of title 38, 
     including information on the amounts of coverage available 
     and the procedures for electing coverage and the amount of 
     coverage.
       ``(2)(A) A covered member of the armed forces may not 
     authorize payment to be made for private sector life 
     insurance by means of an allotment of pay to which the member 
     is entitled under chapter 3 of title 37 unless the 
     authorization of allotment is accompanied by a written 
     certification by a commander of the member, or by a financial 
     services counselor referred to in subsection (b)(2)(A) or an 
     individual providing counseling on financial services under 
     subsection (b)(2)(B), as applicable, that the member has 
     received counseling under paragraph (1) regarding the 
     purchase of coverage under that private sector life 
     insurance.
       ``(B) Subject to subparagraph (C), a written certification 
     described in subparagraph (A) may not be made with respect to 
     a member's authorization of allotment as described in 
     subparagraph (A) until 7 days after the date of the member's 
     authorization of allotment in order to facilitate the 
     provision of counseling to the member under paragraph (1).
       ``(C) The commander of a member may waive the applicability 
     of subparagraph (B) to a member for good cause, including the 
     member's imminent change of station.
       ``(D) In this paragraph, the term `covered member of the 
     armed forces' means a member of the armed forces in grades E-
     1 through E-4.
       ``(d) Financial Services Defined.--In this section, the 
     term `financial services' includes the following:
       ``(1) Life insurance, casualty insurance, and other 
     insurance.
       ``(2) Investments in securities or financial 
     instruments.''.
       (2) Clerical amendment.--The table of sections at the 
     beginning of such chapter is amended by adding at the end the 
     following new item:


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``992. Consumer education: financial services.''.

       (b) Continuing Effect of Existing Allotments for Life 
     Insurance.--Subsection (c)(2) of section 992 of title 10, 
     United States Code (as added by subsection (a)), shall not 
     affect any allotment of pay authorized by a member of the 
     Armed Forces before the effective date of such section.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first month that 
     begins more than 120 days after the date of the enactment of 
     this Act.

  Ms. COLLINS. Mr. President, I am pleased to join with Senator Clinton 
on legislation that will address the persistent problems that we have 
experienced with the sale of inappropriate life insurance and 
investment products to our servicemen and women. Although these issues 
were newly publicized last year in a series of articles in the New York 
Times, these problems actually go back for decades according to a 2002 
Defense Department report.
  According to that report, deceptive practices have been employed to 
sell unnecessary and inappropriate financial products to our military 
for more than thirty years. Furthermore, these sales have been in 
violation of DoD's policies aimed at regulating the sale of commercial 
products on military bases.
  One of the report's most alarming findings is that these practices 
have a ``clear and present'' effect on morale, discipline and unit 
integrity. It states:

       Service members who have been coerced or deceived into 
     buying insurance on a military installation blame not only 
     the sales agents. The victims blame their military superiors 
     for placing them in a position to be misled. The trust and 
     respect that military leaders seek to instill in their 
     subordinates are clearly reduced among those who have bought 
     insurance that is of little or no value to them. This 
     adversely affects the unit integrity.

  The author of this study, an Army General and lawyer, spoke to 
numerous victims of these deceptive sales practices. He stated in his 
report that these soldiers told him that they had less trust in their 
military superiors after these incidents. They also expressed a reduced 
interest in reenlisting.
  With so many of our troops in harm's way, it is time for Congress to 
take decisive action on this matter. Although DoD has issued another 
set of draft regulations, it is barred by statute from implementing 
these reforms until this fall. Moreover, I am not convinced that merely 
tightening the regulation of such sales on base will have the desired 
outcome of significantly reducing the sale of inappropriate insurance 
products.
  The Clinton-Collins legislation would: establish a requirement that 
DoD provide real financial education for service members and their 
spouses; provide for financial counselors at military bases; and 
require that junior enlisted personnel receive information on their 
federally provided life insurance before allotting part of their pay 
toward the purchase of private life insurance products.
  These provisions reflect the problems and deficiencies identified by 
DoD's own report. Specifically, the report concluded that DoD's current 
personal financial education programs were inadequate, noting 
particularly that the education provided enlisted personnel was 
``substantially less than that provided to junior officers.'' It is our 
belief that providing military personnel with a sound financial 
education and access to information is the best method of providing 
them and their families with the protection that they deserve.
  While that report went much further in its recommendations, even 
recommending that such sales be barred, our legislation provides for 
more moderate measures in the hope that we can make real progress on 
this matter without resorting to extreme measures that would unfairly 
punish the countless ethical insurance agents who responsibly serve the 
military life insurance market. Instead, our legislation would give our 
troops the tools to protect themselves against those who engage in 
these abusive and deceptive sales practices.
                                 ______