It's hard to think of a trade group that has been more focused on bank mutual fund activities than the Bank Securities Association.

But as controversy builds over whether banks are doing enough to inform consumers about investment risks, the association's leaders are doing some serious soul-searching.

The group, which prides itself on having led the way in developing sound business practices for banks that sell mutual funds, is starting to believe it hasn't done enough to explain the burgeoning business to policymakers.

"Part of the fault here is ours," said Robert Kurucza, the association's general counsel and a partner with the Washington law firm of Morrison & Foerster. "We have been remiss in not communicating with the regulatory agencies."

That is about to change. In coming months, the association plans to throw itself into the job of talking to lawmakers and regulators about banks' mutual fund activities.

The shift is significant for the association, which has no Washington office and maintains a low profile on policy issues.

The aim is to undo some of the damage inflicted by a recent Securities and Exchange Commission survey. The SEC found that many investors think mutual funds purchased at a bank are federally insured.

At a recent conference in New Orleans, the association conducted a survey of its own, and reached a strikingly different conclusion. Every one of the 20 banks polled indicated that it was "very much in compliance" with bank regulators' guidelines on fund sales, said Peter Succoso, a director of the association and president of the Rodney Square Funds, managed by Wilmington (Del.) Trust Co.

The association officers insist they don't intend to pick apart the SEC's findings. Instead, they're opting for the high road. "We think this underscores the need for an educational process for regulators and for Capitol Hill," Mr. Succoso said.

Who's afraid of banks getting into the mutual fund business? Not William M.B. Berger, president of Berger Associates, Denver, a no-load fund company.

On a New York visit last week, Mr. Berger, who comes from a long family line of trust bankers, said he can't understand why most banks have opted to sell mutual funds that carry sales charges. Unless banks switch to no-load pricing, they won't have much of a chance of wooing customers, he said, as bank customers aren't used to paying up front for services.

And what does he make of all the hoopla about banks looking for mutual fund companies to acquire? Again, not much. Mr. Berger said his company, with $1.7 billion in assets, a solid performance record, and expertise in equity funds, should be attractive to a bank -- but nobody's looking it over. "Not that we'd do anything about it if they did," Mr. Berger said.

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