An FDIC proposal to modernize its sign and advertising rules is welcome, but a less prescriptive approach would allow banks to more effectively communicate to customers which bank products are FDIC-insured and which are not, the American Bankers Association and the Bank Policy Institute said today in a joint letter to the agency.
FDIC seeks to update regulations regarding banks’ use of the agency’s name and logo in light of new banking channels such as mobile and digital banking. The proposal also would clarify rules on misrepresentations of deposit insurance, which comes after the agency has warned multiple cryptocurrency firms for allegedly claiming that their products were FDIC-insured. The rules were last updated in 2006.
In their letter, ABA and BPI said that while they support an update to the rules, certain aspects may make the customer experience more confusing. One example: The proposal would require banks to display the FDIC sign on landing dashboards for customers’ accounts, which could mislead customers into thinking that all the accounts referenced via the dashboard—including non-deposit accounts, such as investment accounts—are FDIC-insured. “The rules should allow banks flexibility to modify signage, advertising and other disclosures as may be appropriate to provide consumers with greater clarity regarding deposit and non-deposit products as technological advancements in banking and financial services continue apace,” the associations said.
ABA and BPI also suggested that proposed requirements related to monitoring third parties should be aligned with the interagency third-party risk management guidance and only cover marketing materials and other public dissemination of information regarding the availability of FDIC deposit insurance; that the rules should be revised to align with the well-established distinction between branches and non-branches; that the FDIC should amend the definition of “non-deposit product” to include cryptoassets; and that if the agency proceeds with amending the rules as proposed, it should allow insured banks at least 18 months to implement the changes.