WASHINGTON - The Office of the Comptroller of the Currency yesterday released new guidelines covering bank sales of investment products such as tax-exempt mutual funds.

Agency officials said the banking circular, which was made effective upon its release yesterday, will ensure that national banks make clear to customers that non-deposit investment products are not federally insured and could lead to losses.

The officials stressed, however, that the guidelines do not carry the weight of formal regulations.

Nevertheless. David Apgar, senior policy adviser to Comptroller of the Currency Eugene Ludwig, said the agency could crack down on banks that violate the guidelines through its general authority to promote safe and sound banking practices.

The guidelines apply to all banks with a national charter. While the guidelines technically embrace sales of municipal bonds by national banks, such sales are governed more directly by regulations issued by the Municipal Securities Rule-making Board, according to William Dehnke, assistant director of the comptroller's securities, investments, and fiduciary practices division within the law department.

Specifically, the guidelines urge banks that sell investments to offer complete and prominent disclosure of the fact that investment products, unlike bank deposits, are not insured by the Federal Deposit Insurance Corp. and could lead to the loss of principal.

But the comptroller's guidelines go well beyond disclosure. For example, they prohibit tellers at national banks from offering investment advice. Officials said they are concerned that some investars might believe an investment has FDIC coverage if a bank employee who accepts a customer's insured deposits also makes a sales pitch for uninsured investments.

The guidelines also urge banks to physically separate deposit-taking and sales functions as a further means of mitigating possible investor confusion.

In addition, banks are expected to ensure that anyone selling non-deposit investment products is properly trained and supervised. "Bank management should consider securities industry or other professional qualification training as an appropriate reference," the comptroller's guidelines say.

The comptroller's guidelines also say that a bank must not offer investment products having a name identical to that of the bank. For example, ABC National Bank could not sell a mutual fund named ABC National Bank Fund, though officials said the name ABC Fund may be acceptable.

In such cases where similar names are used, however, bank examiners will pay close attention both to the training and supervision given to bank employees and to the degree of disclosure the bank makes about the lack of FDIC coverage for the investments, according to Susan Krause, senior deputy comptroller for bank supervision policy.

Apgar, the senior policy adviser, said the guidelines allow banks sufficient flexibility to take their markets and customer base into account while at the same time reducing the possibility that investors may be misled about the safety of the products.

But Apgar noted that such flexibility puts the onus on banks to decide what is best for them. "How important is having a similar name to a bank's marketing plan?" he said. "That's a trade-off a bank needs to make."

Krause said the guidelines were not drawn up because of industry abuses. Rather, she said, the agency was spurred by an increase in bank sales of non-deposit investment products, particularly mutual funds. She said the agency could not say how many banks are selling such products, but said both large and small banks "increasingly are offering investment products."

Apgar said officials are concerned that as more players enter, the field, sound sales practices may be eroded as banks vie with each other and with investment banks for customers. "We're concerned here with a competitively driven deterioration in standards," he said.

Dehnke, the assistant director of the agency's securities division, said competitive pressures may actually work to make banks more cautious. "Customer complaints and loss of business reputation are powerful incentives for banks to make disclosure in big letters on the front page" of any prospectus, he said.

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