The American Bankers Association urged the FDIC yesterday to address potentially deceptive practices by nonbank entities implying deposit insurance coverage that could mislead consumers. Responding to a notice of proposed rulemaking, ABA and the Bank Policy Institute welcomed the agency’s recognition of an increasing number of potential violations of false advertising, misrepresentation of insured status, and misuse of the FDIC’s name or logo.
ABA and BPI recommended that banks not be held responsible for third-party activities beyond the bank’s control, and they urged the FDIC to clarify the application of the proposed rules to bank communications with respect to non-deposit and hybrid products, strengthen a proposed bright-line rule for knowing misrepresentations and clarify that banks may submit complaints through the proposed process.
The associations also urged the FDIC to coordinate with other financial regulators to ensure a consistent approach, “given the diversity of the activities and businesses of nonbank entities.”
