ABA and BPI Letter to FDIC on the Proposal to Modernize Rules Governing FDIC Sign and Advertising Statements

James P. Sheesley
Assistant Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429

Ladies and Gentlemen:

The Bank Policy Institute and the American Bankers Association appreciate the opportunity to provide comments on the Federal Deposit Insurance Corporation's Notice of Proposed Rulemaking Relating to False Advertising, Misrepresentation of Insured Status, and Misuse of The FDIC's Name or Logo. The proposal is intended to modernize the FDIC's sign and advertising regulations so that they better reflect the increased use of internet and mobile banking channels to access insured depository institution banking and other services. Additionally, the proposal clarifies the FDIC's rules regarding misrepresentation of deposit insurance.

The banking industry is strongly committed to consumer protection, promoting public confidence in insured deposits, and preventing false and misleading representations about the manner and extent of FDIC deposit insurance. Accordingly, we support the modernization of these rules, which have not been comprehensively updated since 2006, largely prior to the digitization of the financial services marketplace. Furthermore, given the rise of new market participants offering bank-like products (or products purporting to be bank-like), including those promising pass-through deposit insurance and similar products and services—whether through partnerships with IDIs or independently—we support the FDIC's efforts to prevent misleading representations relating to deposit insurance coverage and to help mitigate customer confusion. Banks seek to provide their customers with a range of products and services through various channels that best meet customer needs and to provide clear descriptions and disclosures of the features of those products and services to prevent false and misleading representations and thereby protect consumers. While the FDIC's regulations do not explicitly apply to digital channels currently, the banking industry is committed to providing consumers clear disclosures related to insured and uninsured products consistent with the principles embodied in both the regulations and the 1994 Interagency Statement on Retail Sales of Non-deposit Investment Products through all banking channels, including digital channels.

For nearly three decades, consistent with the Interagency Statement, banks have experimented with and refined disclosure language and placement and signage placement and format in both physical locations and digital channels to clearly and conspicuously convey to consumers the insured status and possible risks associated with deposit and non-deposit products, respectively.

We are concerned, however, that the proposal is overly prescriptive and does not sufficiently accommodate these current practices and could require significant changes to banks' digital platforms and physical branch locations. Such changes would likely confuse consumers and create unnecessary burden for banks. We urge the FDIC to allow banks greater flexibility to comply with signage and disclosure requirements, accommodate current practices that align with the way technology and the business of banking have evolved and, by extension, the way consumers want to access their funds and other financial services and products.

Download the joint comment letter to read the full text.