Barnett Banks' booming annuity sales effort has been thrust into jeopardy by a Florida administrative decision that found the program has been "deceptive and misleading" to consumers.

Annuity sales agents in Barnett branches failed to make clear that they were not bank employees and that their offerings were not products of the bank, Florida's division of administrative hearings said in a finding handed down Tuesday.

But the hearing officer stopped short of recommending that the program, operated in Barnett branches by James Mitchell & Co., a San Diego, Calif., annuity marketer, be struck down.

It dismissed a key allegation by the Florida Department of Insurance that Mitchell's arrangement to sell annuities through Barnett violates state law.

The finding, in the form of a "recommended order" to the state's insurance commissioner stands as a reminder of the legal and regulatory challenges that banks and their vendors face in selling uninsured investments from bank offices. The concern is that customers won't understand the difference between deposits and the new offerings.

The insurance commissioner, Tom Gallagher, can reject or modify the finding, but he is expected to make it the center-piece of a disciplinary order against Mitchell.

The company denied the charges, and Barnett officials declined to discuss the finding of deceptive practices.

A lawyer for the Florida Department of Insurance said a final order is likely to be issued within 45 days.

If, as expected, Mr. Gallagher shuts down the program, the case is certain to land in court.

The outcome is of great importance to both Barnett, a $38.1 billion-asset banking company based in Jacksonville, Fla., and to Mitchell.

For Barnett, the annuity sales program has pulled in $1 billion over the past four years, making it one of the most successful in the banking industry.

And Mitchell, with a sales staff of 150 covering 600 Barnett branches in Florida, derives more than half its business from Barnett sales.

A protracted legal battle could force Mitchell to make some hard decisions about its commitment to the program, industry experts say.

"Obviously it would become expensive after a while and they would have to consider if it's worth it to them or they should go elsewhere," said John Bellinger, a lawyer at Wilmer, Cutler & Pickering, in Washington.

But James K. Mitchell, the annuity marketer's chairman, vows to fight on.

"We are disappointed with certain aspects of the recommended order," Mr. Mitchell said. "But we intend to promptly and vigorously pursue whatever appeals and legal remedies we deem advisable."

William R. Scherer, a lawyer who represents Mitchell & Co., disputed the administrative body's findings, noting that no specific cases of sales representatives deceiving customers were cited.

"There was no proof anyone was misled," said Mr. Scherer, a partner in the Fort Lauderdale, Fla., firm of Conrad, Scherer, James & Jenne.

He said 40,000 annuity contracts have been sold under the program, yet complaints have totaled only 150, and these have been largely confined to administrative and bookkeeping snafus.

In the interim, the program continues, with Mitchell's attorneys preparing to seek a stay order after Mr. Gallagher issues his final order.

Though Barnett's annuity sales program is closely watched in the industry, the banking company itself has managed to stay out of the fray. Barnett was not named as a respondent in the complaint brought against Mitchell by Mr. Gallagher and is not expected to face disciplinary action from the insurance commissioner.

In his administrative finding, heating officer Charles C. Adams upheld four of the 10 charges filed against Mitchell late last year by the Florida Department of Insurance.

Mitchell & Co.'s disclosure and advertising practices and Mr. Mitchell's personal oversight of the program came under fire.

For instance, Mr. Adams said, Mitchell & Co. blurred the lines between itself and Barnett by using the bank's logo on sales representatives' business cards and by featuring the bank's emerald color scheme on marketing materials.

He recommended that Mr. Mitchell's own Florida insurance license be revoked, saying he had "demonstrated a lack of fitness or trustworthiness to engage in the business of insurance."

Mr. Adams also recommended that the company itself be required to obtain a license to operate in the state, though Florida law does not generally require this.

The administrative ruling didn't go entirely against Mitchell, however.

Mr. Adams dismissed six of the insurance commissioner's contentions, including the basic one.

"We are gratified that the hearing officer has rejected the state insurance commissioner's assertion that Mitchell and Barnett were engaged in an illegal association," said Thomas Johnson, Barnett's chief retail banking executive, in a prepared statement.

Barnett refused to offer any further comment.

Industry observers said this aspect of the ruling was encouraging for every bank in the state.

"This is consistent with what the federal regulators are saying," said Richard Starr, chairman of the Financial Institutions Insurance Association, Corte Madera, Calif. "Banks can have these programs, providing the proper disclosures are made and safeguards taken."

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