We are a federal savings bank. Can our tellers just pass out flyers on the insurance services we provide? Also, our teller windows are about ten feet from the insurance agency. Is that enough distance?

Yes, your tellers may pass out flyers on your insurance services, provided they do not receive referral fees if they are not licensed as insurance producers. And yes, ten feet is likely a sufficient distance, given the size of your institution, provided that you have taken steps to avoid customer confusion about whether the insurance products are insured by the FDIC.

The OCC’s insurance sales rules permit your unlicensed tellers to “refer a consumer who seeks to purchase an insurance product or annuity to a qualified person who sells that product.” (But again, under Illinois law, they cannot be paid referral fees if they are unlicensed.) However, “to the extent practicable,” your insurance sales area must be “physically segregated” from the teller area. You also must “identify the areas where the sales activity occurs and distinguish those areas from the areas where [your] retail deposit taking activities occur.”

The OCC rules do not fix an exact distance for the segregation between teller and insurance areas, and the separation requirement applies only “to the extent practicable.” The OCC acknowledged in its rulemaking that it may not be “practicable for a small institution to have separate areas,” in which case “it could make other efforts to satisfy the separation of functions between deposit taking and selling insurance.” Also, the OCC “leaves significant discretion to each national bank to determine what costs, if any, the bank must incur in order to avoid customer confusion.” Since this issue is left to your discretion, you likely will be able to show that a ten foot separation is adequate if you have taken other steps to ensure that your customers are not confused.

For resources related to our guidance, please see:

OCC Regulations, Consumer Protection in Sales of Insurance, 12 CFR 14.50(b) (“Any person who accepts deposits from the public in an area where such transactions are routinely conducted in the bank or Federal savings association may refer a consumer who seeks to purchase an insurance product or annuity to a qualified person who sells that product . . . .”)

OCC Regulations, Consumer Protection in Sales of Insurance, 12 CFR 14.50(a) (“A Federal savings association must, to the extent practicable, keep the area where the bank or Federal savings association conducts transactions involving insurance products or annuities physically segregated from areas where retail deposits are routinely accepted from the general public, identify the areas where insurance product or annuity sales activities occur, and clearly delineate and distinguish those areas from the areas where the bank's or Federal savings association's retail deposit-taking activities occur.”)

Final Rule, Consumer Protections for Depository Institution Sales of Insurance, 65 Federal Register 75822, 75831 (December 4, 2000) (“The final rule also requires national banks to keep the area where the bank conducts insurance transactions physically separate from the areas where retail deposits are routinely accepted from the general public ‘to the extent practicable.’ This requirement, which is worded like the requirement in the statute, leaves significant discretion to each national bank to determine what costs, if any, the bank must incur in order to avoid customer confusion.”)