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Press Release Tuesday, August 22, 2000 |
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WASHINGTON, D.C. -- Federal agencies yesterday
announced proposed consumer protection rules for the sale of
insurance by banks.
The proposal is part of the implementation of
the Financial Services Modernization Act (also known as the
Gramm-Leach-Bliley Act), a law passed last year that allows the
merger of banks, insurance companies, and securities firms.
Frank Torres, legislative counsel for Consumers
Union, made the following statement today after the proposals were
unveiled by the Comptroller of the Currency, the Federal Reserve
System, the Federal Deposit Insurance Corporation, and the Office of
Thrift Supervision:
"Based on our initial review of this proposal,
we see some decent provisions to help protect consumers, but at least
one provision falls far short of what consumers need.
"The rules for disclosing the obligations and
risks of insurance are simple and reasonable. We are also pleased to
see strong rules aimed at preventing coercion. They explicitly state
that banks cannot force consumers to buy insurance in order to get
another product. Another important provision is that states would be
allowed to approve a stronger set of rules if they choose.
"However, these rules contain a serious flaw.
They fail to update the process for consumers to get their grievances
addressed by their banks. Consumers can no longer count on being able
to take their complaints directly to a bank employee that they've
known personally for years. Today consumers may be dealing with a
person in another state a thousand miles away. Consumers need a
more comprehensive system for making complaints and getting a
response.
"In fact, the Gramm-Leach-Bliley law allows
regulators to expand and improve the system for grievances, but these
rules leave the system the way it is. In other words, the law gives
consumers the right to a better grievance process and it gives
federal agencies the authority to establish that right. But the
proposed rules don't offer any changes in the process we have today,
which may not be adequate to address the needs of consumers in the
new financial marketplace. Simply maintaining the status quo was not
the intent of Congress. At a minimum the regulators should use this
opportunity to create a grievance process that will truly help
consumers.
"Consumers Union will study these rules closely
and offer a more detailed review when we submit our comments during
the public comment period."
Consumers Union, publisher of Consumer Reports magazine, is an independent, nonprofit testing and information-gathering organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers. Consumers Union is online at www.consumersunion.org.
