text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Depository Institution Consumer 
  Protection Act of 1997''.
  
  SEC. 2. CONSUMER PROTECTION REGULATIONS REQUIRED.
  
      (a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811 
  et seq.) is amended by adding at the end the following new section:
  
  ``SEC. 45. CONSUMER PROTECTION REGULATIONS.
  
      ``(a) Regulations Required.--
              ``(1) In general.--Each Federal banking agency shall 
          prescribe and publish in final form not later than six months 
          after the date of enactment of this section of consumer 
          protection regulations which--
                      ``(A) apply to sales, solicitations, advertising or 
                  offers of any nondeposit product by any retail 
                  depository institution, any affiliate or subsidiary of 
                  a retail depository institution, or any person who is 
                  engaged in such activities at an office of the 
                  institution or on behalf of the institution; and
                      ``(B) meet the requirements of this section and 
                  provide such additional protections for consumers to 
                  whom such sales, solicitations, advertising or offers 
                  are directed as the agency determines to be 
                  appropriate.
              ``(2) Consultation and joint regulations.--The Federal 
          banking agencies shall consult with each other and the SEC 
          regarding the regulations required to be prescribed pursuant to 
          paragraph (1) and to the greatest extent practicable shall 
          prescribe such regulations jointly.
              ``(3) Nondeposit product defined.--For purposes of this 
          section, the term `nondeposit product'--
                      ``(A) means any investment and insurance product 
                  which is not an insured deposit;
                      ``(B) includes shares issued by a registered 
                  investment company; and
                      ``(C) does not include--
                              ``(i) any loan or any other extension of 
                          credit by an insured depository institution;
                              ``(ii) any letter of credit; or
                              ``(iii) any other instrument or insurance 
                          or investment product specifically excluded 
                          from the definition of such term by regulations 
                          prescribed jointly by the Federal banking 
                          agencies, to the extent necessary to carry out 
                          the purpose of this Act.
      ``(b) Sales Practices.--The regulations prescribed pursuant to 
  subsection (a) shall include the following provisions relating to sales 
  practices in connection with the sale of nondeposit products:
              ``(1) Anticoercion rules.--
                      ``(A) In general.--Anticoercion rules prohibiting 
                  depository institutions from making any extension of 
                  credit conditional upon:
                              ``(i) the purchase of a nondeposit product 
                          from the same retail depository institutions, 
                          or an affiliate, subsidiary or agent of that 
                          retail depository institution; or
                              ``(ii) an agreement by the consumer not to 
                          obtain, or a prohibition on the consumer from 
                          obtaining, a nondeposit product from an 
                          unaffiliated entity.
                      ``(B) Product marketing.--Specific rules 
                  prohibiting depository institutions, or their 
                  affiliates, subsidiaries or agents from marketing 
                  nondeposit products to consumers while applications for 
                  extensions of credit from the depository institution 
                  are pending, unless such marketing is done by mail, 
                  separate and distinct from any processing, discussion 
                  or provision of information regarding the application 
                  for an extension of credit.
              ``(2) Suitability of product.--
                      ``(A) In general.--Standards to ensure that 
  a nondeposit product sold to a consumer is suitable and appropriate for 
  the consumer based on financial information disclosed by the consumer.
                      ``(B) Rules of fair practice.--In prescribing the 
                  standards under subparagraph (A) with respect to the 
                  sale of investments, the Federal banking agencies shall 
                  take into account the Rules of Fair Practice of the 
                  National Association of Securities Dealers.
      ``(c) Disclosures and Advertising.--The regulations prescribed 
  pursuant to subsection (a) shall include the following provisions 
  relating to disclosures and advertising in connection with the sale of 
  nondeposit products:
              ``(1)(A) Disclosures.--Requirements that the following 
          disclosures be made orally and in writing before the completion 
          of the sale and, additionally, in the case of subparagraph 
          (iv), at the time of application for an extension of credit:
                      ``(i) Uninsured status.--The product is not insured 
                  by the Federal Deposit Insurance Corporation or the 
                  United States Government.
                      ``(ii) Insurance product.--In the case of an 
                  insurance policy which is sold by the retail depository 
                  institution, affiliate, subsidiary or other person as 
                  agent, the product is not guaranteed by the retail 
                  depository institution.
                      ``(iii) Investment risk.--In the case of an 
                  investment product, there is an investment risk 
                  associated with the product, including possible loss of 
                  principal.
                      ``(iv) Coercion.--The approval, by the retail 
                  depository institution, of an extension of credit may 
                  not be conditioned on:
                              ``(I) the purchase of a nondeposit product 
                          which is sold by the retail depository 
                          institution, affiliate, or other person as 
                          agent; or
                              ``(II) an agreement by the consumer not to 
                          obtain, or a prohibition on the consumer from 
                          obtaining, a nondeposit product from an 
                          unaffiliated entity.
              ``(B) Adjustments for alternative methods of purchase.--In 
          prescribing the requirements under subparagraph (A), necessary 
          adjustments shall be made for purchase in person, by telephone 
          or by electronic media to provide for the most appropriate and 
          complete form of disclosure.
              ``(C) Consumer acknowledgement.--A requirement that a 
          retail depository institution shall require any person selling 
          a nondeposit product at any office of, or on behalf of, the 
          institution to obtain, at the time of the initial purchase by 
          the consumer of such product, a separate statement, signed and 
          dated by the consumer, which contains the declaration that the 
          purchaser has received the disclosure required under this 
          subsection with respect to such product. Notwithstanding any 
          rule of evidence, written acknowledgement of receipt of any 
          disclosures by a person to whom such information is required to 
          be given does no more than create a rebuttable presumption of 
          delivery thereof.
              ``(2) Prohibition on misrepresentations.--A prohibition on 
          any practice, or any advertising, at any office of, or on 
          behalf of, the retail depository institution which could 
          mislead any person or otherwise cause a reasonable person to 
          reach an erroneous belief with respect to--
                      ``(i) the uninsured nature of any nondeposit 
                  product sold, or offered for sale by the institution or 
                  any affiliate or agent of the institution; or
                      ``(ii) the investment risk associated with any such 
                  product.
      ``(d) Separation of Banking and Nonbanking Activities.--The 
  regulations prescribed pursuant to subsection (a) shall include such 
  provisions as the Federal banking agencies consider appropriate to 
  ensure that the acceptance of deposits or the extension of credit by a 
  depository institution, are kept physically segregated from nondeposit 
  product activity. These provisions should include at a minimum the 
  following provisions:
              ``(1) Separate setting.--A clear delineation of the setting 
          in which, and the circumstances under which, transactions 
          involving nondeposit products may be effected, and referrals 
          made, to ensure that such activity is conducted in a location 
          physically segregated from the area where retail deposits are 
          accepted, extensions of credit are granted or insured products 
          are sold by or on behalf of a depository institution.
              ``(2) Certain persons prohibited from selling nondeposit 
          products.--Standards prohibiting any person who accepts 
          deposits from the public at any office of, or on behalf of, an 
          insured depository institution from selling or offering to 
          sell, or offering an opinion or investment advice on, any 
          nondeposit product.
              ``(3) Referral.--Notwithstanding paragraph (2), the 
          regulations shall include standards requiring that a person who 
          accepts deposits from the public at any office of, or on behalf 
          of, an insured depository institution may refer a customer who 
          seeks to purchase, or seeks an opinion or investment advice on, 
          any nondeposit product to a person who sells or provides 
          opinions or investment advice on such product only if--
                      ``(A) the consumer explicitly requests such 
                  referral; and
                      ``(B) the person who accepts deposits--
                              ``(i) does not solicit such request;
                              ``(ii) discloses to the consumer that such 
                          product is not insured by the institution, the 
                          Federal Deposit Insurance Corporation, or the 
                          United States Government, or the institution; 
                          and
                              ``(iii) does not receive any compensation 
                          for the referral.
              ``(4) Qualification requirements and training.--Standards 
          prohibiting any depository institution from permitting any 
          person to sell or offer for sale, or provide an opinion or 
          investment advice about, any nondeposit product in any part of 
          any office of the institution, or on behalf of the institution, 
          unless such person--
                      ``(A) is registered with the Securities and 
                  Exchange Commission as a broker or dealer, as a 
                  representative of a broker or dealer, or as an 
                  investment adviser; or
                      ``(B) meets qualification and training requirements 
                  which the Federal banking agencies jointly determine 
                  are equivalent to the training and qualification 
                  requirements applicable to a person who is registered 
                  with the Commission as a broker or dealer, as a 
                  representative of a broker or dealer, or as an 
                  investment adviser, as the case may be; or
                      ``(C) in the case of insurance sales, is qualified 
                  in accordance with regulations promulgated by the 
                  Federal banking regulators or in accordance with state 
                  law, as appropriate.
              ``(5) Compensation programs.--Standards to ensure that 
          compensation programs are not structured in such a way as to 
          provide incentives for the referral or sales of nondeposit 
          products that are not suitable or appropriate for the consumer.
      ``(e) Consumer Enforcement Mechanism.--The Federal banking 
  regulators shall jointly establish a consumer enforcement mechanism for 
  receiving and resolving within nine months of receipt of a written 
  complaint non-frivolous consumer complaints involving an alleged 
  violation of regulations issued under this section which shall:
              ``(1) involve an impartial decisionmaker;
              ``(2) allow consumers to recover from an institution that 
          violates the regulations established under this section;
              ``(3) provide a written statement of the basis for any 
          decision and a public record of the proceedings.
      ``(f) Use of Names of Depository Institutions.--No insured 
  depository institution, and no affiliate of any insured depository 
  institution, may use or permit any other person to use the name, title, 
  or logo of such institution or any word or design which is the same as, 
  or substantially similar to, the name, title, or logo of such 
  institution in connection with any nondeposit product--
              ``(1) which is offered for sale by the institution or 
          affiliate or by any other person at any office, of, or on 
          behalf of, the institution; or
              ``(2) with respect to which the institution, affiliate, or 
          other person provides an opinion or advice.
      ``(g) Requirements Relating to Confidential Consumer Financial 
  Information.--No retail depository institution shall disclose to any 
  affiliate or subsidiary of that institution that is not a retail 
  depository institution, and no affiliate of that company that is not an 
  insured depository institution shall disclose to any other affiliate 
  that is an insured depository institution or a subsidiary thereof, any 
  information regarding transactions or experiences between a consumer 
  and the depository institution affiliate or subsidiary in a position to 
  disclose this information unless the consumer--
              ``(1) has received clear and conspicuous disclosure that 
          such information may be communicated among such persons; and
              ``(2) has had an opportunity, before such information is 
          initially communicated, to direct that such information not be 
          communicated among such persons. The provisions of the Fair 
          Credit Reporting Act shall otherwise with regard to the sharing 
          of information among affiliates; except that section 615(b)(2) 
          of such Act shall apply without regard to section 
          615(b)(2)(C)(ii).
      ``(h) No Effect On Other Authority.--
              ``(1) In general.--No provision of this section shall be 
          construed as limiting or otherwise affecting--
                      ``(A) any authority of the Securities and Exchange 
                  Commission, any self-regulatory organization, the 
                  Municipal Securities Rulemaking Board, or the Secretary 
                  of the Treasury under any Federal securities law;
                      ``(B) any authority of any State insurance 
                  commissioner or other State authority under any State 
                  insurance law; or
                      ``(C) the applicability of any Federal securities 
                  law or State insurance law, or any regulation 
                  prescribed by the Commission, any self-regulatory 
                  organization, the Municipal Securities Rulemaking 
                  Board, the Secretary of the Treasury, or any State 
                  insurance commissioner or other State authority 
                  pursuant to any such law, to any person.
              ``(2) Definitions.--For purposes of this subsection, the 
          following definitions shall apply:
                      ``(A) Federal securities law.--The term `Federal 
                  securities law' has the meaning given to the term 
                  `securities laws' in section 3(a)(47) of the Securities 
                  Exchange Act of 1934.
                      ``(B) Self-regulatory organization.--The term 
                  `self-regulatory organization' has the meaning given to 
                  such term in section 3(a)(26) of the Securities 
                  Exchange Act of 1934.''.
target: Depository Institution Consumer Protection Act of 1997 - Amends the Federal Deposit Insurance Act to require each Federal banking agency to prescribe consumer protection regulations pertaining to the sales, solicitations, advertising, or offers of a nondeposit product by a retail depository institution (including its affiliates, subsidiaries, and persons engaged in such activities at an institution office, or on its behalf). 
  Encompasses within the ambit of such regulations:  (1) anticoercion sales and product marketing rules; (2) product suitability; (3) mandatory disclosure of the non-insured and non-guaranteed status of a nondeposit product, including investment risks; (4) prohibition of misrepresentation; (5) physical segregation of banking and nonbanking activities; (6) sales personnel qualification requirements and training; and (7) the structuring of compensation programs with respect to nondeposit product referral or sales incentives. 
  Directs Federal banking regulators to jointly establish a consumer enforcement mechanism for expeditious consumer complaint resolution. 
  Proscribes the use of a deposit institution name or logo in connection with a nondeposit product serviced by such institution. 
  Sets forth safeguards relating to confidential consumer financial information.
feat_title: Depository Institution Consumer Protection Act of 1997