Few areas of banking have attracted more regulatory scrutiny in the past year than sales of uninsured investment products, and there's no sign it will abate anytime soon.

Amid last year's mutual fund boom, banking regulators, eager to head off customer confusion and inappropriate sales tactics, issued sweeping guidelines governing bank investment sales.

Among other things, the guidelines directed banks to explain the difference between insured deposits and uninsured mutual funds, and to segregate the areas of the bank where mutual funds are sold from the deposit-gathering areas.

While the interagency guidelines have had a far-reaching impact, industry sources say banks' investment products compliance efforts will continue to require considerable attention.

For one thing, the National Association of Securities Dealers has entered the scene. The association is preparing regulations to govern investment sales by bank-affiliated broker-dealers.

"The pressure on banks is not going to let up," said Barry Leeds, president of Barry Leeds &Associates, New York.

A key reason, experts say, is that interest rate hikes are hurting the performance of bond mutual funds, a popular investment among bank customers.

What's more, lawsuits alleging inappropriate sales techniques have been brought against several big banks, putting banks and their regulators on the defensive.

"Clearly, the industry is making demonstrable progress -- but just as clearly, there is still much more to do," Comptroller of the Currency Eugene A. Ludwig said in a recent speech.

Some community bankers have found the regulatory demands so great that they have decided to stay out of investment sales altogether.

But most banks are trying to comply, and are standardizing sales practices, boosting training efforts, putting more sales people through licensing programs, and hiring full-time compliance staff.

North Carolina's Wachovia Crop., for instance, is in the midst of a sweeping training program that will involve employees at almost every level of its 645 branches.

And banks have stepped up efforts to monitor their sales practices. Mr. Leeds said a study conducted by his firm shows that 70% of banks regularly perform compliance audits on their brokerage units, compared to 40% last year.

Clearly, banks have spent heavily in the process. Edward Furash, chairman of Furash & Co., a washington-based consulting firm, estimates that banks are putting 25% of their resources toward compliance in general, up from 10% or 15% a year ago. "That increase," he said, "is due to activity in investment product sales."

Approximately 700 banks have also submitted their marketing materials to a review by the Office of the Comptroller of the Currency. Bankers cite this voluntary effort as evidence of their desire to do right by customers.

But there is also a growing feeling that enough is enough.

"I'd be totally shocked if they put anything else on the table than what's already in the interagency guidelines," said John Vaughan Jr., president of Southern National Investment Services, the brokerage arm of Southern National Bank, Charlotte, N.C.

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