WASHINGTON -- Most customers who buy mutual funds at banks rely heavily on oral disclosures to understand the risks of investing, according to preliminary findings of a survey by the Office of the Comptroller of the Currency.

"Far more important than what a customer signs or reads may be what a customer hears," said David Apgar, senior policy adviser to the comptroller.

While banks have been under pressure to sharpen their written disclosures of mutual fund risks, Mr. Apgar's remarks suggest that oral sales pitches, which are much more difficult to monitor, may now begin to receive equal regulatory attention.

The telephone survey is part of an effort by the Comptroller's office to find ways of helping bank customers tell the difference between the government insured deposits they usually get at banks and uninsured mutual funds, Mr. Apgar said.

Independent survey firms are conducting the interviews with a handful of banks, with OCC staff members listening in. The survey, which is being funded by the participating banks, is expected to be completed in July.

Several recent studies have shown that bank customers have trouble grasping the difference between insured deposits and mutual funds sold by banks, even though regulators have required banks to make extensive disclosures.

Signs in Lobbies

For example, banking regulators require banks to display prominent notices of investment risk on signs in bank lobbies, sales brochures, and written documents. Just last week, the Comptroller's office asked banks to send their advertising and sales materials to Washington for a voluntary review.

Comptroller Eugene A. Ludwig has already called on the other regulators and the Securities and Exchange Commission to launch a coordinated program of sending testers, or "mystery shoppers" to monitor the sales pitches of fund salespeople at banks and brokerages.

The proposal has received a decidedly cool response at the Federal Reserve and the SEC. Still, all the regulators have decided to meet on June 1 to talk about it.

Special Cases

Mr. Apgar suggested that the Comptroller's office may limit its testing program to banks that do not have the resources to set up an independent self-testing program or follow-up telephone interviews with customers who have bought mutual funds.

He would not specify how many banks the OCC is surveying, but said that agency staff would sit in on 40 to 50 hours of customer interviews.

Among other things, the agency is asking customers how effective signs in bank lobbies and the separation of banking and investment product services have been in helping them understand that investment products are different from insured deposits.

Surveyors are also asking customers who referred them to mutual fund sales staff, and whether they were given suitable advice on which products to invest in.

Senior Management's Role

In a wide-ranging interview with the American Banker this week, Mr. Apgar summarized the Comptroller's regulatory strategy as ensuring that senior management exercises meaningful oversight over bank mutual fund sales. Underpinning that is "disclosure, disclosure, disclosure," Mr. Apgar said.

Unlike the sales force, "senior management will look at customers in a very long term light," Mr. Apgar said.

"So the essence of our strategy is to harness the natural view of bank senior management in protecting the long-term interest of customers ... and to make sure that interest is getting communicated to the sales force."

The Comptroller's recent approval of Mellon Bank's acquisition of Dreyfus Corp. stressed that condition, Mr. Apgar pointed out, and it will likely be a part of conditions for similar transactions in the future.

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