A financial services trade group is asking the Office of the Comptroller of the Currency to preempt a Rhode Island law restricting bank insurance sales.
In a Sept. 5 letter to OCC Chief Counsel Julie L. Williams, the Financial Institutions Insurance Association wrote that the new state law significantly interferes with national banks' sales of insurance and is therefore preempted by the National Bank Act.
This is the first time the agency has been asked to implement the Supreme Court's Barnett decision, which gave the regulator the power to preempt state laws that discriminate against national bank insurance sales.
The law, enacted Aug. 8 by Rhode Island Gov. Lincoln Almond, bars most bank employees from selling insurance, requires insurance activities to be conducted in a "physically separate" part of the bank, and prohibits the use of nonpublic customer information in marketing the insurance products.
"The law is seriously flawed and aims only to protect at all cost independent agencies and insurance agents from competition with financial institutions," said association chairman Richard D. Starr in a written statement. The group represents 250 banks, thrifts, credit unions, mortgage companies, and insurance firms.
A spokeswoman for the Comptroller's Office said the agency has not yet prepared a response to the association's letter.