[Brent V]

Posted Privately:

Our Marketing Department and Wealth Management affiliate are looking to enhance the brand awareness of our affiliate. Some of the things they are looking to do include:

• Providing a brochure about our affiliate. The brochure would disclose the services the affiliate offers and the name of the representative that is designated and trained to sell products at that branch.
• Disclosing information about our affiliate on our TVs and outside LED signs.
• Having an Affiliate day in which to promote the affiliate and their services. The day would be advertised on the branch door, TV and outside LED sign.

My questions are as follows:

1. They would like to have our Tellers provide a generic brochure to every customer. We understand the interagency guidance states Tellers shouldn’t make general or specific investment recommendations. Perhaps I’m splitting hairs, but if the Teller is only providing clients with a brochure (with the required disclosures) about the affiliate’s services and not providing any recommendations would this be allowable?

2. While our TVs run bank ads, would it be permissible to advertise our wealth management affiliate if we fully inform our clients that the products are not FDIC insured, not deposits of the Bank and are subject to investment risk, including loss of principal?

Thank you for your assistance!

[Brent V]

The requirements related to advertising/promoting non-deposit investment related products are quite strict. At a minimum any advertisement or disclosure must include the three statements:
* are not insured by the FDIC;
* are not deposits or other obligations of the institution and are not guaranteed by the institution; and,
* are subject to investment risks, including possible loss of the principal invested.

In addition, the advertisement or promotional materials must not suggest or convey any inaccurate or misleading impression about the nature of the product or its lack of FDIC insurance.

My biggest concern about a teller handing out a brochure, even with proper disclosures as mentioned above is the fact that the teller likely has an “FDIC Insured” sign at his/her teller window and there are specific requirements that prohibit that in the Interagency Statement on Retail Sales of Nondeposit Investment Products, specifically:
“To minimize customer confusion with deposit products, sales or recommendations of non-deposit investment products on the premises of a depository institution should be conducted in a physical location distinct from the area where retail deposits are taken. Signs or other means should be used to distinguish the investment sales area from the retail deposit-taking area of the institution. However, in the limited situation where physical considerations prevent sales of non-deposit products from being conducted in a distinct area, the institution has a heightened responsibility to ensure appropriate measures are in place to minimize customer confusion.”

While the brochure has proper disclosure, it may be considered by some examiners as a recommendation of a nondeposit investment product in an area where retail deposits are accepted. I think the same argument would hold true if the televisions in the branch are behind or near the teller window or deposit taking area of the branch where FDIC insured signs were housed.

While these guidelines could be interpreted differently, the safest course of action is to ensure these two areas of the financial institution remain separate.

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