In a letter to regulators today, the American Bankers Insurance Association expressed its opposition to the Federal Reserve Board’s proposal to apply its incentive-based compensation rule to persons providing insurance. ABIA pointed out that the proposal is “inconsistent with joint rulemaking and unenforceable,” and urged the board to exclude insurance providers from the rule.
The incentive-based compensation rule was mandated by the Dodd-Frank Act, which notably leaves out any reference to insurance firms, ABIA pointed out. While the OCC’s and FDIC’s version of the proposed rule includes an exclusion for persons providing insurance, the Fed’s definition of “covered person” does not, making it contrary to the terms specified by Dodd-Frank.
The association added that the incentive-based compensation rules are to be enforced under the Gramm-Leach-Bliley Act, which explicitly states that the Fed does not have enforcement authority over insurance providers. Therefore, the Fed lacks the authority to enforce the rule, ABIA concluded.