Independent Banker - October 2022 - 33

Next: The evolution of core systems 
of financial technologies-such as
crypto assets, including stablecoins-
and the risks posed to consumers
if they are lured to these or other
financial products or services
through misrepresentations or false
advertising. The circular specifies
that firms cannot misuse the
name or logo of the FDIC or make
deceptive representations about
deposit insurance.
It also stresses that covered
persons and service providers are
required to comply with the CFPA
with respect to representations to
consumers involving the name or
logo of the FDIC and representations
about deposit insurance.
It describes certain
misrepresentations to consumers
that can violate the CFPA's
prohibition on deceptive acts or
practices in connection with a
transaction with a consumer for
a consumer financial product or
service or the offering of a consumer
financial product or service.
Part 328 of the FDIC Rules and
Regulations, Advertisement of
Membership, illustrates the official
sign of the FDIC and prescribes
its use by insured depository
institutions. It also specifies the
official advertising statement insured
depository institutions must include
when promoting either deposit
products or certain non-specific
banking products and services.
Special rules and an exception
apply to uninsured, non-deposit
investment products.
Full disclosures
Today's financial marketplace
provides consumers with a wide
array of choices. The products
offer opportunities for consumers
to diversify financial portfolios
and offer beneficial competition
among financial service providers.
What does FDIC
insurance cover?
Covered by
FDIC insurance
f Checking accounts
f Negotiable order of
withdrawal (NOW)
accounts
f Savings accounts
f Money market deposit
accounts (MMDA)
f Certificates of deposit
(CD)
f Cashier's checks
f Money orders
f Other official items
issued by the bank.
Not covered by
FDIC insurance
f Stock investments
f Bond investments
f Mutual funds
f Life insurance policies
f Annuities
f Municipal securities
f Safe deposit boxes or
their contents
f U.S. Treasury bills, bonds
or notes
f Bitcoin and many
other cryptocurrency
exchanges
issued joint guidance in February
1994-the Interagency Statement on
Retail Sales of Nondeposit Investment
Products. The interagency statement
addresses: 1. How the location of
uninsured nondeposit products sales
activities should be distinguished from
other retail banking services within
a financial institution; 2. Training
of nondeposit investment products
sales representatives; 3. How sales
representatives should assess the
suitability of uninsured investment
products for your customers; 4.
Compensation arrangements for
bank employees for direct or indirect
sales activities; 5. Use of depositor
information in nondeposit investment
product sales programs; 6. What must
be disclosed about the uninsured
investment products you are selling;
and 7. When the required disclosures
must be made.
Banks, because of their facility to
offer both insured and uninsured
products, must ensure clear and
conspicuous disclosures are made to
help customers distinguish between
insured products and uninsured
investment products (see sidebar).
In support of that requirement,
the federal bank regulatory agencies
The interagency statement covers
practical matters such as presentation
of nondeposit investment account
information on periodic statements
and, if brochures, signs or other
written material contain information
about both FDIC-insured deposits
and nondeposit investment products,
that these materials should clearly
segregate information about
nondeposit investment products from
the information about deposits.
Now is a good time to shore up
FDIC insurance disclosures and their
use. Community banks should check
that the form of statements and
images is accurate, that they are used
as required and that they are separate
and distinguishable from those used
for nondeposit investment products
or uninsured cryptocurrencies.
Consistent, accurate use of disclosures
helps build the trust between the bank
and its customers. 
Mary Thorson Wright is a writer
in Virginia.
independentbanker.org Q 31
http://www.independentbanker.org
Independent Banker - October 2022

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