NDIP Signs in Deposit-Taking Areas

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Question:

Our bank offers nondeposit investment products through a third party. This party has prepared posters and wants our bank to display them at our teller windows, new account desks and the customer counter in the lobby. I was under the impression that this was not permitted and actually had an examiner take a poster off of our customer counter in the lobby. However, I can't seem to find this in writing anywhere. I can see where it states that tellers should not, while located in the routine deposit-taking area, make general or specific investment recommendations regarding nondeposit products, but it does not specifically state that brochures/posters cannot be located in these areas. Could you please advise me on this issue?

Answer:

Your statement is from the 1994 Interagency Guidance. I have some additional quotations below, but the theme you will see is that there is a preferred separation of insured and non-insured products. Advertising this at the teller window can easily lead a consumer to believe that this product, sold in your bank, is also insured. One could argue that, done right, the ad would clearly differentiate insured from non-insured deposits, but marketers are often hesitant to show this distinction as clearly as would be needed. It can’t be lost in the fine print and this may be considered deceptive advertising.

The best and most-accepted solution has been to separate these two areas as well as possible.

In that same section, 2010.6.1.3.2, it states, "Selling or recommending nondeposit investment products on the premises of a depository institution may give the impression that the products are FDIC-insured or are obligations of the depository institution. To minimize customer confusion with deposit products, sales or recommendations of nondeposit 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."

Above that, 2010.6.1.3.1 states, "The banking agencies believe that recommending or selling nondeposit investment products to retail customers should occur in a manner that ensures that the products are clearly differentiated from insured deposits. Conspicuous and easy-to-comprehend disclosures concerning the nature of nondeposit investment products and the risk inherent in investing in these products are one of the most important ways of ensuring that the differences between nondeposit products and insured deposits are understood."

Under 2010.6.2.2.2 it also states, "Displays of promotional sales materials related to nondeposit investment products in a bank's retail areas should be grouped separately from material related to insured bank products."

First published on BankersOnline.com 08/02/04