The Office of the Comptroller of the Currency is preparing to issue an advisory letter within the next few weeks detailing how it will Washington supervise bank insurance sales.

OCC Chief Counsel Julie Williams said the agency is putting the final touches on the document, which will be presented to Comptroller Eugene Ludwig shortly for approval.

Ms. Williams declined to discuss the advisory. But sources said it addresses how state rules apply to banks, how banks should comply with anti-tying restrictions, how management should oversee insurance products, and how examiners should review a bank's insurance activities.

"This will be very helpful," said James McLaughlin, the director of regulatory and trust affairs at the American Bankers Association. "As banks begin to consider how to get into the insurance business, they will need to know what the comptroller expects of them and what kinds of limitations there might be on the location or sale of insurance."

According to sources familiar with the advisory letter, the OCC will require national banks to follow state licensing, training, and consumer protection laws. But the agency also will rule that national banks are exempt from state laws that attempt to interfere with the their ability to sell insurance, sources said. This is the standard the Supreme Court laid out in its recent Barnett decision.

"This is consistent with what they have been saying all along," Mr. McLaughlin said. "They don't want restrictions on a national bank's ability to exercise its authority."

The advisory letter also will include a discussion of the anti-tying rules, which generally prevent a bank from requiring a consumer to purchase a product in order to get a loan. The letter will require bankers to inform consumers that they do not need to purchase their insurance from the bank, according to these sources. It also will reiterate that banks cannot coerce consumers to buy insurance from them.

One industry official said the agency included this section to placate several lawmakers who were unaware of the existing anti-tying rules.

The management section will address the responsibilities of top bank officials. Sources said the guidelines will instruct bankers to ensure that consumers don't confuse insurance products with traditional bank products. That means reviewing all advertisements to make sure they don't mislead consumers. It also will warn banks that they cannot share confidential information with insurance units.

It also will require bankers to separate the parts of the lobby where they sell insurance and traditional banking services. And it will say that tellers should not recommend insurance products to consumers, according to sources.

The letter also will include guidance for managers on which types of insurance products to sell, sources said.

The last section will address examinations. The agency is expected to say that its examiners won't conduct exhaustive, on-site reviews. Rather, it will investigate whether the bank understands the risks its faces and if it has a plan to control these risks. There won't be detailed exam guidelines or a special insurance rating, sources said.

Industry officials generally praised the document. "They have done a very credible job on this," said Joe Belew, president of the Consumer Bankers Association. "There weren't any big red flags. But we have to see what finally comes out."

Kathleen Collins, general counsel to the Financial Institutions Insurance Association, said the document should help scores of banks that have decided to sell insurance since the Supreme Court's Barnett decision.

"Our members are looking forward to the guidance," she said. "It will help avoid future problems."

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