[Federal Register Volume 66, Number 53 (Monday, March 19, 2001)]
[Rules and Regulations]
[Pages 15345-15346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6638]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 53 / Monday, March 19, 2001 / Rules 
and Regulations  

[[Page 15345]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 14

[Docket No. 00-26]
RIN 1557--AB81

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Docket No. R-1079]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 343

RIN 3064--AC37

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 536

[Docket No. 2001-16]
RIN 1550--AB34


Consumer Protections for Depository Institution Sales of 
Insurance; Change in Effective Date

AGENCIES: Office of the Comptroller of the Currency, Treasury; Board of 
Governors of the Federal Reserve System; Federal Deposit Insurance 
Corporation; and Office of Thrift Supervision, Treasury.

ACTION: Final rule; delay of effective date.

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SUMMARY: This final rule delays the effective date for the final 
consumer protection rules for sales of insurance by depository 
institutions published by the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, the 
Federal Deposit Insurance Corporation, and the Office of Thrift 
Supervision (collectively, the Agencies) in the Federal Register of 
December 4, 2000 (65 FR 75822). These rules were published pursuant to 
section 47 of the Federal Deposit Insurance Act (FDIA), which was added 
by section 305 of the Gramm-Leach-Bliley Act. Due to the need to 
complete significant information system changes and modifications to 
documentation and sales processes and to satisfy training demands with 
respect to compliance by depository institutions and other entities 
with the final rules, the Agencies are delaying the effective date of 
the final rules from April 1, 2001, to October 1, 2001.

EFFECTIVE DATE: This amendment delays the effective date of the final 
rules published December 4, 2000, at 65 FR 75822, until October 1, 
2001.

FOR FURTHER INFORMATION CONTACT:
    OCC: Stuart Feldstein, Assistant Director, Legislative and 
Regulatory Activities Division, (202) 874-5090; Asa Chamberlayne, 
Senior Attorney, Securities and Corporate Practices Division, (202) 
874-5210, Office of the Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.
    Board: Richard M. Ashton, Associate General Counsel, Legal 
Division, (202) 452-3750; Board of Governors of the Federal Reserve 
System, 20th and C Streets, NW., Washington, DC 20551.
    FDIC: Keith A. Ligon, Chief, Policy Unit, Division of Supervision, 
(202) 898-3618; Michael B. Phillips, Counsel, Supervision and 
Legislation Branch, Legal Division, (202) 898-3581; Amy A. Mitchell, 
Senior Capital Markets Specialist, Division of Supervision, (202) 898-
3670, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
    OTS: Robyn Dennis, Manager, Corporate Governance and Controls, 
(202) 906-5751; Richard Bennett, Counsel (Banking and Finance), (202) 
906-7409; Sally Watts, Counsel (Banking and Finance), (202) 906-7380, 
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

    On December 4, 2000, the Agencies published final rules (65 FR 
75822) implementing section 47 of the FDIA, which was added by section 
305 of the Gramm-Leach-Bliley Act. Section 47 of the FDIA directs the 
Agencies jointly to prescribe and publish consumer protection 
regulations that apply to retail sales practices, solicitations, 
advertising, or offers of any insurance product or annuity by a 
depository institution or any person at an office of the institution or 
on behalf of the institution. The final rules apply to retail sales, 
solicitations, advertising, or offers of insurance products or 
annuities made by an insured depository institution, by any person at 
an office of the institution, or by any person off of the institution's 
premises if the transaction is made on behalf of the institution. The 
rules require, among other things, various consumer disclosures, 
consumer acknowledgements, and segregation of deposit taking and 
insurance sales areas.

II. Justification for Amendment of the Effective Date

    The final rules included an effective date of April 1, 2001. In 
establishing that effective date for the final rules, the Agencies 
recognized that a certain lead time would be necessary for depository 
institutions and other entities acting ``on behalf of'' those 
institutions to adjust their internal systems and sales practices to 
comply with the disclosure, consumer acknowledgments, and other 
requirements of the final rules. Based on information available as of 
the promulgation of the final rules, the Agencies established the 
effective date for the final rules as April 1, 2001.
    Since December 4, 2000, the Agencies have received written comments 
describing various difficulties that depository institutions are 
experiencing in complying with the final rules. During February, 2001, 
several depository institutions and financial services trade 
associations requested that the effective date for the final rules be 
extended from April 1, 2001 to January 1, 2002. One of the comment 
letters, signed jointly by four trade associations, advised that 
financial institutions need to receive guidance ``as soon as possible'' 
from the Agencies that the effective date will be significantly 
delayed. The commenters indicated that otherwise, many institutions 
will need to temporarily terminate certain insurance sales programs, 
especially credit insurance sales programs, for which the

[[Page 15346]]

institutions would not be able to comply by April 1, 2001.
    The commenters stated that the following implementation problems 
support a significant delay in the effective date of the final rules:
     Many of the larger depository institutions underestimated 
the magnitude of the compliance demands required by the final rules, 
including the training of a significant number of individuals who 
currently sell insurance ``on behalf of'' those institutions as ``dual 
employees'' or nonaffiliated insurance agents who sell from an 
institution's premises.
     With respect to the credit disclosure requirements in the 
final rules, institutions must check every loan application document 
pertaining to all lending lines of credit, including revising, 
inventorying, and restocking all credit card applications at each 
location of the institutions.
     Many institutions have relationships with insurance 
underwriters under which the institutions use an application form 
prepared by the underwriters. As a result of the final rules, those 
institutions must request that the underwriters revise their 
application documents to incorporate the disclosures and consumer 
acknowledgments required in the final rules.
     Since changes to the application documents of insurance 
underwriters that are prepared for depository institutions must be 
approved by state insurance commissioners (in certain situations, by 
state insurance commissioners in all 50 states), significant additional 
time will be necessary for compliance with the final rules.
     The marketing of certain insurance products, such as 
credit insurance products, by depository institutions was significantly 
impacted by the final rules. New marketing formats are under 
development but will not be available by April 1, 2001, for 
implementation by third parties acting ``on behalf of'' depository 
institutions.
    The Agencies have determined that the reasons submitted by the 
commenters after the publication of the final rules are sufficient to 
support a significant delay of the effective date of the final rules. 
The delay will provide depository institutions and other entities 
subject to the final rules with sufficient time to become familiar with 
the requirements and bring their operations into compliance, thus 
avoiding the need to curtail the availability of insurance products and 
annuities to the public.
    The Agencies believe that a six-month extension of the effective 
date to October 1, 2001, should provide a sufficient time for 
depository institutions and other entities to comply with the 
disclosure, customer acknowledgment, and other requirements in the 
final rules. This period will provide sufficient opportunity for 
analysis and training without unreasonably delaying important consumer 
protections.
    Under the Administrative Procedure Act (APA), an agency may suspend 
general notice-and-comment rulemaking procedures if the agency ``for 
good cause finds (and incorporates the finding and a brief statement of 
reasons therefor in the rules issued) that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest.'' 5 U.S.C. 553(b)(3)(B). The Agencies find that they have 
good cause to delay the effective date without first soliciting comment 
concerning this action. Because the effective date of the final rules 
(April 1, 2001) is fast approaching, it is impracticable to seek 
further public comment before issuing this amendment to the final rules 
delaying the effective date of those rules. In addition, such a delay 
is in the public interest for the reasons explaining above.
    For similar reasons, the Agencies also find that this action 
delaying the effective date of the final rules must take effect on 
April 1, 2001, which is less than 30 days after publication of this 
amendment to the final rules. As a result, depository institutions and 
other entities subject to the final rules will not be required to 
comply with the new insurance consumer protection requirements for a 
brief period at the beginning of April 2001, as they would in the event 
that a 30-day, delayed effective date were used.

III. Regulatory Analysis

A. Regulatory Flexibility Act

    Under section 604 of the Regulatory Flexibility Act (RFA) (5 U.S.C. 
604), a final regulatory flexibility analysis is required only for 
notice-and-comment rulemakings conducted under section 553 of the APA. 
Since the Agencies find that there is ``good cause'' under the APA for 
not proceeding with notice-and-comment rulemaking for this amendment to 
the effective date for the final rules, the RFA does not require that a 
final regulatory flexibility analysis be provided for this amendment.
    The Agencies provided regulatory flexibility analyses in the 
preamble to the final rules published on December 4, 2000 (65 FR 
75830--75837). In those regulatory flexibility analyses, the Agencies 
considered the likely impact of the final rules on small entities and 
determined that the final rules will not have a significant impact on a 
substantial number of small entities.

B. Executive Order 12866

    The determinations made by the OCC and OTS that the final rules did 
not constitute a ``significant regulatory action'' (65 FR 75837) apply 
to the rules as amended by this effective date revision.

C. Unfunded Mandates Act of 1995

    The Unfunded Mandates Reform Act of 1995 (UMA) applies only when an 
agency is required to issue a general notice of proposed rulemaking or 
a final rule for which a general notice of proposed rulemaking was 
published. 2 U.S.C. 1532. As noted above, the OCC and OTS have 
determined, for good cause, that this amendment to the final rules may 
be issued without prior notice and comment. Accordingly, the OCC and 
OTS have concluded that the UMA does not require an unfunded mandates 
analysis of this amendment to the final rules. The UMA finding made 
when the related final rules were published is found in the preamble of 
those rules (65 FR 75837-75838).

D. Executive Order 13132--Federalism

    As described by the OCC and OTS in the preamble to the final rules 
(65 FR 75838), there are consultation requirements imposed on them by 
section 6(c) of Executive Order 13132. In accordance with those 
requirements and of section 47(a)(3) of the FDIA, the Agencies have 
consulted with the National Association of Insurance Commissioners 
concerning this amendment to delay the effective date of the rules.

    Dated: March 9, 2001.
John D. Hawke, Jr.,
Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System, March 12, 2001.
Jennifer J. Johnson,
Secretary of the Board.
    By order of the Board of Directors, Federal Deposit Insurance 
Corporation.

    Dated at Washington, DC, this 13th day of March, 2001.
Robert E. Feldman,
Executive Secretary.
    By the Office of Thrift Supervision.

    Dated: March 12, 2001.
Ellen Seidman,
Director.
[FR Doc. 01-6638 Filed 3-16-01; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P