The Office of the Comptroller of the Currency aims to finish a rough draft of its guidelines for insurance sales by national banks within two weeks.

The agency's best-practices guidance will cover at least 11 areas, including customer disclosures and employee compensation, according to Julie L. Williams, the agency's chief counsel.

The guidelines, which will correspond to investment products rules issued by bank regulators in 1994, are needed even if Congress or the courts shrink national banks' insurance powers, Ms. Williams said.

"National banks are going to be involved in sales of insurance products," Ms. Williams said. "The scope is going to be determined by other forces, but that business is there."

The plan is to issue guidelines, then come up with exam procedures to make them stick. Formal regulations on insurance sales are also "certainly a possibility in the future," Ms. Williams said.

Areas to be covered by the guidelines include:

*Where insurance can be sold. It will have to be done from "distinguishable locations" in or outside of bank branches, Ms. Williams said - not by tellers.

*Disclosures to customers. "The key concern there is that customers understand the nature of the product that they're buying," she said.

*Promotional and sales literature. Material must make clear that an insurance company, not the bank, is underwriting the insurance product.

*Anti-tying regulations. Banks must be reminded that there are laws against tying loan approvals to insurance purchases.

*Inappropriate sales recommendations. Banks will have to determine whether an insurance product is appropriate for a particular customer.

*Employee compensation. Incentive payments to insurance salespeople will have to be structured so as not to encourage overly aggressive sales tactics.

*Employee qualification and training. Banks will have to follow minimum standards in hiring insurance salespeople.

*Use of customer information. The Comptroller's office is still debating if and how banks can use information garnered from depositors and borrowers to sell them insurance. "I'm not sure where we're going to come out on that," Ms. Williams said.

*Handling of complaints. Banks will have to set up procedures for dealing with them.

*Director and management oversight. Senior management will have to play a role in deciding which insurance products to sell.

*Applicability of state law. The Comptroller's office has argued that national banks are subject to state insurance regulations, as long as those regulations don't discriminate against banks. But the specifics are muddy, and controversial.

The Barnett Banks case argued last month before the Supreme Court, which involves the state of Florida's attempts to block national bank insurance sales, could clear up the issue somewhat. Meanwhile, Comptroller of the Currency Eugene A. Ludwig met Jan. 16 with representatives of 15 state insurance departments to discuss bank insurance sales, and another meeting is planned, although no date has been set.

Also, Ms. Williams met last month with consumer groups and bank trade associations to discuss the guidelines.

Bob Hunter, director of insurance for the Consumer Federation of America, said letting banks sell insurance "could result in a boon to consumers if it's done right." He added that it's too early to tell, however, if bank regulators will come up with guidelines that truly protect consumers.

Philip S. Corwin, a banking lobbyist, said the industry should welcome the efforts of the Comptroller's office. "They're trying to do the right thing here," he said.

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