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Can you summarize 12 CFR Part 2?
COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY > SALES OF CREDIT LIFE INSURANCE
Short Summary
This legal document, found in the Code of Federal Regulations under the section ‘Banks and Banking’, governs the sales of credit life insurance by national banks. It applies to national bank employees, officers, directors, principal shareholders, and certain entities in which such persons own an interest of more than ten percent. The document prohibits directors, officers, employees, and principal shareholders from personally profiting from the sale of credit life insurance and requires that commissions or other income from such sales be credited to the bank’s income accounts. However, there are exemptions in certain circumstances where a third party is involved and the person is not part of the bank’s credit decision process. The document also allows bank employees or officers to participate in bonus or incentive plans based on the sale of credit life insurance, with certain limitations on the amount of payments. Additionally, it governs the compensation arrangements between banks and their employees, officers, directors, or principal shareholders who hold an insurance agent’s license. It allows these individuals to compensate the bank for the use of its premises, employees, or goodwill, but requires that any income received from the sale of credit life insurance to the bank’s loan customers be turned over to the bank as compensation. The document also allows income derived from credit life insurance sales to be credited to an affiliate operating under the Bank Holding Company Act of 1956 or to a trust for the benefit of all shareholders, as long as the bank receives reasonable compensation for its role in the sales.
Whom does it apply to?
National bank employees, officers, directors, principal shareholders, and certain entities in which such persons own an interest of more than ten percent
What does it govern?
Sales of credit life insurance
What are exemptions?
Certain circumstances where a third party is involved and the person is not part of the bank's credit decision process
What are the Penalties?
No specific penalties mentioned
Jurisdiction
U.S. Federal Government