Question & Answer
Question: I think I heard somewhere that in marketing non-deposit investment products ("NDIP") there are limitations on the customer information that we may use. Is there such a limit (I can't find it) and are there any restrictions on account level or what we offer to different customers?
Answer: You can't find it because it doesn't exist except in the wishful thinking of securities dealers. The banking agencies have taken the position that the customer information you have, particularly information about deposit assets, is appropriate to use in targeting sales calls for NDIP. There is a caveat, however. Privacy and confidential treatment of customer information is a priority concern right now. This means that any customer information should be treated with care. If you are providing customer information or simply lists to a third party vendor, it is a good idea to include in your contract with the vendor strict provisions on how the vendor will manage, use, and store your customer information.
Another consideration is customer suitability. Securities sales are subject to customer suitability reviews. This, in the context of customer privacy concerns, is something that your vendor contract should also provide for.
Finally, all sales, no matter how they are originated, must include the non-deposit warnings and disclosures. Although the FDIC has not explicitly said so, it is a good idea to stress these disclosures more than usual when the bank or its vendor originates the sales call from a customer database. It is simply a good idea to be extra certain that the customer understands the nature of the product.
Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 13 & 14, 10/98
First published on 10/01/1998