I know the regulation states that tellers and other employees while located in routine deposit taking ares, such as a teller or drive up window should not make general or specific investment recommendations regarding nondeposit investment products, but is it permissible to have flyers ath the teller windows advertising such products, and the teller hand the ad to the deposit customer with their receipt?

I say no. The "other investment area" needs to be clearly separated from the "FDIC" insured area of the bank. A teller can refer someone over to the non-insured area, but that's it. Handing out material from the teller line may cause customer confusion, and if a subsequent investment goes south, you can bet that customers will tell the story of where they initially received documentation.

It's hard to simply hand documentation to someone without saying something about it and it follows that it would be hard to control what a teller is saying, so just don't allow them to hand out documentation covering non-bank investment products.

I agree with Grist, especially if the ads make ANY recommendations toward products. You'd have to analyze the customers needs, objectives and risk levels to be very specific at all.

If you had very generic take-ones that referred them to your Rep. that would be as far as I'd consider going, and I'd thoroughly research that in advance. (I haven't.)

I use a bubble analogy, no NDIP stuff is allowed “inside” the bubble that is around the teller station/new accounts desk. No fliers, brochures, etc. = no confusion with clear separating lines.

It would be rather inconsistent to explain to the tellers “you can’t say specific or general recommendation about NDIP products, but, here give out this flier that does give specific or general recommendations.”

There have been specific marketing campaigns for NDIP's we have done in the past that focused on customers to our bank drive-up windows. In each of these instances, the marketing material ran the gauntlet of legal/compliance review before 1st use and were submitted to the NASD for approval because the NDIPs were being offered by the bank's broker/dealer subsidiary.

I agree with the "bubble" theory and stress that avoiding customer confusion is and should be paramount to distribution of the marketing materials. But there can be ways to achieve a peaceful compromise between marketing, legal, compliance, the b/d, and the retail banking staff.

I don't think that a compromise is possible. Tellers inherently want to add a hook to material that they hand out, so saying something like "you can double your interest" may be used. That's selling the product.

Based on your post, you could take that drive-up handout one step further by including the same material as a statement stuffer, correct? I don't think so!

Why are you ruling out statement stuffers?

Based on the fact that the statement itself covers FDIC insured products. I'm not an expert on this, but from a logically point of view, it seems that customers may end up confused as to what they are looking at, e.g. a bank FDIC insured product or a separate investment product. Basically, you would be sending documentation covering a non-insured product wrapped inside an FDIC product statement. If this practice fits into the spirit of the regs, I'm really going to be surprised.

Are you sending investment material out as statement stuffers at this time? If yes, it follows that you probably have the same material all over the lobby, correct?

The Interagency Statement on Retail Sales of Nondeposit Investment Products – 2/15/94 – Advertising and Other Promotional Material Section states, "If brochures, signs, or other written material contain information about both FDIC-insured deposits and nondeposit investment products, these materials should clearly segregate information about nondeposit investment products from the information about deposits."

Yes, we do occasionally promote our NDIP offering via a statement stuffer that meets the interagency guidelines, and passes muster with our third-party vendor's compliance and legal department and myself. But no, we don't have brochures on the teller line or anywhere near it. We have them available for officers to give out when referring the customer to the NDIP area.

Sorry Grist - have to side with lglover on this one. I know of no prohibition on including NDIP marketing info. in FDIC insured account statements, as long as they meet the advertising requirements. Furthermore, I am not aware of any requirement to segregate brochures in the lobby.

It appears that you have the reg on your side, but why is it that you do not have non-FDIC brochures all over the lobby? It appears that that method of disseminating information would also be well within the reg, correct?

I continue to believe that investment products should be completely separated from FDIC products - marketing statements, placement in lobby areas, etc. with that position within the spirit of the regs, not the words.

We have done the same as lglover, with the blessings of our regional OCC. We are very careful not to allow NDIP materials where deposits are received, however.

That's O.K. as lglover has a valid point, but regs are guidelines, in some cases, and if you look at especially older customers out there, co-mingling FDIC insured and Non-FDIC products in one mailing is unseemly, at best, given the reasons for regulations in this area.

Is it an effort to not convey the truth or to disguise the risk? Probably not, but what would you say if a customer told you that they lost their life savings in a non-FDIC secured investment through your bank - an investment that was initially introduced/presented to them as part of their monthly FDIC-insured product statement? The customer thought it was insured and doesn’t recall anything that took place during the sales phase. Would you feel good about the entire marketing/sales cycle?

If a you have a registered representative working in conjunction with your bank that would allow an elderly person to make an investment where they could lose their life savings, you would deserve whatever the courts or public could throw at you. I don't think the issue in that scenerio would come down to flyer that was delivered in a checking or savings account statement.

In this market, anything is possible, so what you think will or will not happen is not a valid point and what it may or may not get down to is also a mystery, so it's best to have a pure system of delivery, in my opinion, but whether of not you share that opinion is strictly your business.

Agreed. Also, the non-FDIC disclosures are explained during the interview, signed before the account is opened, and appear on every statement the customer gets - in appropriately 'conspicuous type.'

I know that there are some people who are never going to read anything you give them, or listen to anything you say to them - but just by following the interagency guidelines, we're giving them many more disclosures than any of the other consumer regulations require.

The registered reps also have a personal stake in all this - if they sell something inappropriate, or don't explain, or don't disclose - they stand to lose their license, and therefore their livelihood.

Suitability requirements will dictate that a registered investment representative is not selling high risk products to clients expecting CD's.

Clients can pick up a brochure pretty much anywhere, in-fact at other locations or financial institutions which may lead them to question an investment opportunity. This often happened to me when I sold investments with a large bank. As a trained professional, with both my license and personal liability (fines are HUGE and include imprisonment) making sure the investment the client ended up with in the end was suitable was a primary function. Additionally, the bank covered these issues by providing us with training, testing, and secret shops to ensure we were following the guidelines for investments we offered to our clients. It was so strict that we went so far as to move to another desk to sell the client a CD if that was ultimately what was most appropriate after a through interview.

If you offer investment products, and they are the right thing for your client, it's your responsibility to share the information with them. Hiding the brochures in my brief case (I visited locations once a week) wouldn't exactly help the clients.

No we did not allow these non-FDIC brochures in the teller area, but we did have the non-FDIC brochures in the lobby for bank staff to refer to. They had strict instructions to cover compliance (no marking the brochures) and the Non-FDIC information was posted clearly in that section of the brochure rack.

No client I ever sold an investment to thought they bought a CD. Some lost money, some gained money, and...I'm sure whatever they ended up with, was the appropriate product at the time. It is not only the reps job, it's their future...I look really bad in stripes!

Did you send investment brochures as statement stuffers? If not, do you think this is appropriate?

I was reviewing this in one of our branches this morning. The NDIP brochures were on a display in the lobby area that include brochures on our checking and savings accounts. There were also FDIC brochures right in front of the NDIP display. We moved the NDIP brochures away from the table, but one of the Investment employees objected. I feel it was better safe than sorry to keep them totally separated.

While I won't fault anyone for playing it safe, just realized it is not a regulatory requirement. Don't confuse advertising materials with the actual sales process that definitely has to be separated. In the Interagency Statement of Retail Sales of Nondeposit Investment Products it states:

"If brochures, signs, or other written material contain information about both FDIC-insured deposits and nondeposit investment products, these materials should clearly segregate information about nondeposit investment products from the information about deposits."

If the interagency statement contemplated that both FDIC insured products and non-FDIC insured products could be placed in the same document, I don't see how having separate brochures in a brochure rack could be construed as against the "spirit" of the regulation.

Another example that I thought of is if you offer non-insured products, do you have a separate website for advertising?

We do have a separate website for our NDIP products.

What happened to the FRB's Checkers Bank that was designed to help banks with website compliance??? Anyone know where it went??

It seems to me they had examples of NDIP advertising on their sample site and I know a lot of other banks that do advertise NDIP on their main websites without fear of criticism (if they do it right that is).

Don't read me wrong, your bank has a right to choose a conservative approach. I just hate to see banks feel like "this is how it has to be done" when that might not be the case.

See this thread .

I don't know that we did send out investment brocures with deposit products, more because we had alot of brocures and we didn't pump any one company. We did send out information about other products available like annuities, mutual funds and our discount brokerage...with the included Non-FDIC information clearly stated (we also used the red circle with a cross through it and the letters FDIC).

As long as it's very clear to clients...and they can't purchase any product without hearing the disclosures repeatedly (about 3 times per purchase with signatures etc.) I wouldn't be concerned.

Don't get me wrong...I wouldn't want to see specific investment product brochures on the teller line. Not because I think they'll promise rates...tellers aren't idiots (at least I hope not because they handle alot of our bucks) but because I wouldn't want a specific product brochure handed out everyone (say a mutual fund that had a higher risk level) because of the suitability issue. Also because your bank shouldn't be pushing one company over another (unless it's bank funds).