(a) General. The provisions of 209 CMR 49.06 shall govern the insurance sales activities of banks, federal banks and lenders. For purposes of 209 CMR 49.06, the term "bank" shall include a bank, federal bank and lender unless otherwise provided.
(b) Waivers. A mortgagee which is not chartered as a bank, federal bank or licensed as a small loan company, mortgage lender or broker shall not be a bank for the purposes of the waiver provisions of 209 CMR 49.06(4)(b). Federal banks shall be governed by the waiver application provisions of 211 CMR 142.05(2)(b) instead of 209 CMR 49.06(4)(b)1. and 2.
(2) Plan of Operation.
(a) Banks and Lenders. All insurance sales activities by banks or lenders shall be conducted in accordance with the plans of operation submitted to, and approved by, the Commissioner under 209 CMR 49.05(3).
(b) Federal Banks. All insurance sales activities by federal banks shall be conducted in accordance with the plans of operation, which conform to 209 CMR 49.05(3), submitted to, and approved by, the Division under M.G.L. c. 175, § 209, and 211 CMR 142.00 et seq..
(3) Solicitations and Sales by Bank Personnel. The solicitation and sale of insurance by banks shall be conducted by licensed personnel of such institutions to the extent required by applicable insurance laws and regulations. Unlicensed officers, tellers and other employees, however, may refer customers to licensed personnel only where:
(a) the customer initiates an inquiry as to the availability or acquisition of insurance products; and
(b) such unlicensed personnel are not additionally compensated for such referrals.
(4) Insurance Sales on Bank Premises.
(a) Locations. A bank may solicit and sell insurance products on bank premises, provided such activity is conducted in a distinctly designated area which is separate and apart from physical areas in which transactions involving insured deposits or extensions of credit are conducted.
1. Grounds. The Commissioner, in his or her discretion, may waive the requirement under 209 CMR 49.06(4)(a) for the physical separation of bank and insurance services upon a demonstration by a bank or lender that space considerations, such as the size or design of said bank premises, preclude such separation. The burden is upon the applicant bank or lender to demonstrate that size, design, landmark status, National Register of Historic Places designation, site impediments, local zoning requirements, building codes, fire codes or other relevant considerations warrant the granting of a waiver.
2. Waiver Conditions.
a. Common areas may be permitted for banking and credit transaction and insurance purposes if physical constraints warranting such condition are satisfactorily demonstrated by a bank's or lender's waiver application.
b. In any instance where such waiver is granted, a bank or lender employee, licensed as an insurance producer, shall not, in any manner involving the application by a customer for an extension of credit by said bank or lender, act as the representative of the bank or lender both with respect to said application and with respect to the solicitation and sale of insurance products to said customer, whether or not such insurance is required for the extension of credit.
c. It shall be the responsibility of a bank or lender to institute procedures to eliminate customer misunderstanding or confusion as to the distinction between such insurance products and other bank or lender functions, and to prevent any misrepresentation thereof if a waiver is granted.
d. The Commissioner, in his or her discretion, may impose such other conditions as may be deemed necessary to effectuate the purposes of M.G.L. c. 167F, § 2A(b)(3) and M.G.L. c. 171, §75B(b)(3).
e. The Commissioner, in his or her discretion, may subject a waiver application under 209 CMR 49.06(4)(b) to such notice and hearing as may be required.
3. Limitation on Waivers. Notwithstanding 209 CMR 49.06(4)(b), any bank premises constructed, purchased, leased or acquired by a bank on or after September 1, 1998, or on or after [insert effective date of regulation] for a bank subject to M.G.L. c. 171, §75B, for the conduct of its authorized business, including the solicitation and sale of insurance, shall not be eligible for the waiver provided for herein, unless said acquisition results from a merger, consolidation or purchase of assets pursuant to applicable provisions of M.G.L. c. 168, M.G.L. c. 170, M.G.L. c. 171 and M.G.L. c. 172 or under comparable provisions of federal law in the case of a federal bank.
4. Applications. Applications for waivers shall be available for public inspection upon request unless the information is exempt from disclosure under M.G.L. c. 66, § 10 and M.G.L. c. 4, § 7, paragraph 26. Decisions approving or denying such applications shall be in writing and shall be available for public inspection upon request.
(a) General. A bank is prohibited from tying the availability and extension of credit by a bank to the purchase of insurance products from said bank in violation of M.G.L. c. 176D § 4, or 12 USC §§ 1971 through 1978 and its implementing regulations promulgated by the Board of Governors of the Federal Reserve System.
(b) Solicitation Restrictions in Credit Transactions. No solicitation for the sale of insurance in conjunction with any application for the extension of credit shall be permitted until said application has been approved, such approval and the disclosures required by 209 CMR 49.06 have been provided to said applicant in writing, and the receipt of both said approval and disclosures has been acknowledged in writing by said applicant. The date, time and method of the communication of said approval and disclosures to the applicant, together with the applicant's acknowledgment of the receipt thereof, shall be made a permanent part of the bank record of such extension of credit.
(c) Solicitation Restrictions in Mortgage Loan Transactions. In the instance of an application to a bank for an extension of credit to be secured by a mortgage on real estate and in which it is necessary for the applicant to obtain a policy insuring said premises against loss and designating such bank as loss payee
1. said bank shall make the initial disclosure of the necessity of such insurance in its letter of commitment to the applicant approving the requested extension of credit;
2. such bank shall not, in any manner, solicit the applicant to purchase the required insurance from the bank until said commitment has been accepted by the applicant; and
3. such bank shall not reject any such policy, so long as it satisfies the required insurance, because the policy was issued by a company other than that for which the bank acts as agent in the sale of insurance products.
(d) Mass Marketing Exception. 209 CMR 49.06(5) shall not apply in situations where a bank contacts a customer in the course of direct or mass marketing of insurance products to a group of persons in a manner that bears no relation to any such person's loan application or credit decision.
(6) Rebates. Rebates shall be regulated pursuant to the provisions of M.G. L. c. 175, § 182 through 184.
(7) Mandatory Consumer Disclosures.
(a) Disclosure Contents. A bank, through its licensed insurance producers, shall disclose in writing to a potential insurance customer that:
1. the insurance products which are available are not deposits of the bank, are not protected by the federal deposit insurance corporation or any other type of deposit insurance, are not an obligation of or guaranteed by the bank, and may be subject to risk;
2. any insurance required as a condition of the extension of credit by the bank need not be purchased from the bank but may, without affecting the approval of the application for an extension of credit, be purchased from an agent or insurance company of the customer's choice; and
3. the customer may file any complaints with the Office of Consumer Affairs, as provided in 209 CMR 49.06(10).
(b) Exception. The disclosure required by 209 CMR 49.06(7)(a)1. shall not apply to a lender that does not accept deposits.
(c) Disclosure Form. The disclosures required by 209 CMR 49.06(7)(a) shall be provided in writing and receipt thereof shall be acknowledged in writing by the customer.
(8) Customer Information Security and Confidentiality.
(a) A bank, licensed as an insurance producer under M.G.L. c. 175, § 209 shall not permit the unauthorized release, dissemination, or sharing of confidential information, including medical record information, protected by M.G.L. c. 175I, within the bank's organization, including its affiliates, subsidiary corporations and third party vendors, as well as to third parties;
(b) a bank shall not permit the unauthorized release, dissemination, or sharing of confidential credit or other information, protected by the federal Fair Credit Reporting Act, 15 USC § 1681, and its implementing regulations, within the bank's organization, including its affiliates, subsidiary corporations and third party vendors engaged in insurance sales activities, as well as to third parties; and
(c) A bank shall at all times remain in compliance with M.G.L. c. 175I and the federal Fair Credit Reporting Act.
(9) Anti-Discrimination Requirements. No bank engaged in the direct sales of insurance products shall unlawfully discriminate against an insurance applicant or allow an affiliate, a subsidiary corporation established for the purpose or a third party acting on its behalf to unlawfully discriminate against an applicant for any insurance products offered by it based upon his or her membership in any class protected by M.G.L. c. 151B, § 4(3A)-(3B), including but not limited to, race, color, national origin or residence. No bank offering insurance products at its bank premises, shall refuse to offer the same at every such branch of the bank.
(10) Consumer Complaint Processing.
(a) A bank engaged in insurance sales activities, as an insurance producer, shall forthwith forward copies of all Massachusetts customer complaints relative to such activities to the Office of Consumer Affairs. Said Office shall cause a record of all such complaints received to be maintained and shall, depending upon the nature of the complaint, refer any such complaint for resolution to the Commissioner or the Division.
(b) The processing and resolution of consumer complaints under 209 CMR 49.06(10) shall be governed by the Interagency Agreement, and any amendments thereto.
(c) A bank shall take reasonable steps to investigate all consumer complaints and shall make a good faith effort to resolve such customer complaints in a timely manner.
(d) Nothing in 209 CMR 49.06(10)(a) shall prohibit a consumer from filing a separate individual complaint directly with the Office of Consumer Affairs, the Commissioner and/or the Division. Such complaints shall be processed pursuant to the Interagency Agreement.
(11) Unfair and Deceptive Acts or Practices. Any violation of 209 CMR 49.06 shall be deemed to be unfair methods of competition and unfair and deceptive acts or practices under M.G.L. c. 167, §§ 2A through 2G, inclusive and M.G.L. c. 93A.