FDIC / Retail Insur Sales – What does the FDIC consider when evaluating policies and procedures, sales settings, referrals, and compensation?

Compliance > Retail Insurance Sales
Q:  What does the FDIC consider when evaluating policies and procedures, sales settings, referrals, and compensation?
 
A:   Pursuant to the FDIC manual, considerations would include the following:
 
Policies, Procedures and Internal Controls
 
Consider whether the retail insurance sales program’s policies and procedures include a description of the following elements:
  • Types of products sold;
  • Supervision of personnel involved in sales; and
  • Compliance procedures to ensure sales activities are conducted in accordance with Part 343.
Review the policies and procedures, and through interviews and observation consider the practices of the institution in the following areas:
 
Sales Setting
 
Is the area in which insurance is sold physically distinct from the area in which retail deposits are taken?
  • Employees do not make insurance recommendations, or take orders for insurance products, even if unsolicited, while located in the routine deposit-taking area. (This includes reviewing any prepared scripts on handling deposit customers, or customers whose certificates of deposit are maturing.)
 
Referrals
 
Employees who are not authorized and qualified to sell insurance only make referrals, and do not make insurance recommendations or take orders for insurance products. (This includes reviewing any prepared scripts on referring deposit customers, or customers whose certificates of deposit are maturing.)
  • Management and staff (including tellers and receptionists) adhere to part 343 and the institution’s insurance sales policy when making customer referrals.
 
Compensation
 
Compensation to institution employees for customer referrals is a one-time nominal fee of a fixed dollar amount for each referral, and that the compensation is paid regardless of whether the referral results in a transaction.
 
 
This Q&A was based on information contained in the FDIC’s Consumer Compliance Examination Manual – June 2018, for Retail Insurance Sales, which may be found here:  https://www.fdic.gov/regulations/compliance/manual/9/ix-2.1.pdf
 

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