Regulators Clarify Guidelines On Labeling Uninsured Products

WASHINGTON - Bankers will get a clearer picture of how and when they must disclose information about uninsured investment products, thanks to a clarification released by the four bank and thrift agencies on Wednesday.

The agencies issued the explanation in response to an Oct. 17, 1994, letter from the American Bankers Association. The ABA requested that regulators clear up a number of ambiguities in mutual fund disclosure guidelines that regulators issued in early 1994.

"The interagency guidance was the theoretical model, but this is a more practical interpretation of what that means," said Ed Alwood, spokesman for the Office of the Comptroller of the Currency.

The clarification notes that retail sales of uninsured investment products by bank personnel or third parties in or adjacent to the lobby are still subject to the interagency guidance, as are sales made by affiliated broker-dealers in the lobby.

But trust accounts for which customers do not have a direct hand in investment decisions and wholesale sales of government and municipal securities are not subject to the disclosures.

"That looks pretty darn good," said Sarah A. Miller, senior government relations counsel at the ABA. "The lack of clarity and assurance as to who is covered by the guidelines has been a big, confusing factor."

The guidelines issued last year outlined steps banks must take to reduce customers' confusion about whether investment products are insured by the government or not. Among other things, the instructions directed banks to clearly disclose to consumers that mutual funds and certain other investment products are not guaranteed by the Federal Deposit Insurance Corp.

However, the guidelines glossed over a number of details necessary to make bankers confident they were in full compliance, Ms. Miller said.

Wednesday's clarification also said that banks do not need to disclose that an investment product is uninsured during radio advertisements of 30 seconds or less.

Banks also will be able to use a simple logo in written and television advertisements, billboards, signs, and ATM screens. The logo must include three statements: "Not FDIC insured," "No bank guarantee," and "May lose value."

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