June 13, 2002
FOR IMMEDIATE RELEASE
CONTACT: CHRISTOPHER GOETCHEUS
Swift To Sue Federal Comptroller Over Bank Insurance Sales Ruling
Governor Jane Swift today announced her intent to sue the U.S. Comptroller of the Currency over the federal agency's move to pre-empt the Commonwealth's consumer protection laws regarding the sale of insurance by banks.
"This action is based on the right of Massachusetts and every other state to not have an un-elected federal bureaucracy overturn provisions designed to protect consumers," Swift said.
Swift has asked Attorney General Thomas Reilly to execute the legal action in federal court on behalf of the state's Division of Banks and Division of Insurance.
The litigation seeks to annul a March 18 determination by the federal Comptroller of the Currency that a bill passed by Congress in 1999 preempts three Massachusetts statutory provisions regulating insurance sales by banks.
The provisions, in place since 1998, restrict how banks can utilize deposit relationships and lending relationships in order to sell insurance products to customers.
The first provision prohibits non-licensed bank personnel from referring customers to licensed insurance agents or brokers except upon inquiry initiated by the customer. The second prohibits non-licensed bank personnel from receiving any additional compensation for insurance referrals, regardless of whether the compensation is conditioned upon the sale of insurance.
The third provision requires a bank to refrain from making an insurance solicitation in connection with a home mortgage or home equity loan application until after the bank has approved the loan.
"The bedrock principle of state's rights is as important an ingredient in this action as the consumer protection measures that we are attempting to preserve. State's laws should not be overturned by a federal bureaucracy unless there is a clearly articulated Congressional intent to do so, which in this case, there is not," Swift said.