October 5, 1994
TO: BOARD OF GOVERNORS NO. 103-94
FEDERAL LEGISLATION COMMITTEE NO. 31-94
FEDERAL LEGISLATION MEMBERS NO. 29-94
BANK ISSUES GROUP
RE: SENATE SPECIAL COMMITTEE ON AGING HOLDS HEARING ON BANK
SALES
__________________________________________________________
Last week, the Senate Special Committee on Aging held a
hearing to examine issues raised by bank sales of uninsured
products, including mutual funds, to elderly customers.
The hearing featured two panels of witnesses. The first
panel was comprised of two investors who testified they had been
affirmatively misled by bank brokers into making non-insured
investments instead of insured deposits, and two former bank
brokers who had allegedly been discharged because of their
objections to bank sales practices. The second panel featured
representatives from the North American Securities Administrators
Association, the Bankers Roundtable, and Prophet Research
Corporation, a compliance monitoring firm specializing in bank
customer relations.
The hearing focused on the adequacy of bank disclosure and
suitability determinations. The sale of uninsured products in
banks was not criticized per se. Also, the Prophet Research
witness cited recent surveys by his organization which showed
marked improvement in disclosure and other consumer issues
related to bank sales of uninsured products.
The Senate Special Committee on Aging is an ad hoc panel
devoted to the investigation of issues related to older
Americans. While the Committee does not have any specific
legislative jurisdiction, Senator William Cohen, Ranking Member
of the Committee, announced that the Committee was developing
legislation to deal with certain issues raised at the hearing.
We will keep you informed of further developments. If you
wish additional information, please call the Legislative Affairs
Department at 202/326-5890.
Julie Domenick
Vice President
Legislative Affairs