Banks Selling Insurance Products to Face More Scrutiny
October 2, 2011
According to speakers at the American Bankers Insurance Association conference,
while insurance companies may not receive much oversight from the new Consumer
Financial Protection Bureau (CFPB), banks that sell insurance and debt
protection products will not escape such scrutiny and could, in fact, see it
increased. Banks opted to sell insurance products as a way to shore up their
bottom lines as income from fees and loans fell. The Dodd-Frank financial law
provided the CFPB with jurisdiction over banks offering these insurance products
and whether those firms are disclosing terms to consumers. Some have said that
language on disclosure information made available by the bureau could dissuade
consumers from purchasing these insurance products and could impact long-term
demand. According to a U.S. GAO report released in March, the nine largest
credit card issuers earned $2.4 billion in fees for debt protection products in
2009, but only paid out $518 million in benefits to consumers. Critics of the
CFPB language say that it is too biased against the products and are looking for
language that is more neutral.
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