Military Personnel Financial Services Protection Act - (Sec. 3) Amends the Investment Company Act of 1940 to make it unlawful: (1) for any registered investment company to issue any periodic payment plan certificate; or (2) for such company or any depositor or underwriter of such company, or other person, to sell such a certificate. States that existing certificates are not invalidated.
Directs the Securities and Exchange Commission (SEC) to report to specified congressional committees on: (1) any measures taken by a registered broker or dealer voluntarily to refund payments made by military service members on any periodic payment plan certificate, and the amounts of such refunds; (2) the sales practices of such brokers or dealers on military installations over the past five years and any legislative or regulatory recommendations to improve such practices; and (3) the revenues generated by such brokers or dealers in certificate sales over such period, and what products such brokers or dealers market to replace the revenue generated from those sales which are now prohibited.
(Sec. 4) Amends the Securities Exchange Act of 1934 to require a registered securities association to establish and maintain: (1) a system for collecting and retaining broker/dealer registration information; and (2) a toll-free telephone listing, and a readily accessible process to respond promptly to inquiries regarding registration information on its members and their associated persons, including any other registered national securities exchange that uses such system for registration of its members.
Requires a registered securities association to adopt rules governing the process for making such inquiries in consultation with any registered national securities exchange providing such information.
Permits such associations to charge reasonable fees for responses to such inquiries, except to individual investors.
Requires a registered securities association to adopt rules establishing an administrative process for disputing the accuracy of information provided in response to inquiries in consultation with any registered national securities exchange providing the same type of information.
Shields an association or an exchange reporting information to the association from liability for actions taken or omitted in good faith.
(Sec. 5) Amends the Investment Advisers Act of 1940 to authorize the SEC to require an investment adviser to file with the SEC, through any designated entity, any fee, application, report, or notice required to be filed. Directs the SEC to require such entity to establish and maintain a toll–free telephone listing or other readily accessible electronic or other process to receive and promptly respond to inquiries regarding registration, disciplinary, and other information involving investment advisers and associated persons.
(Sec. 6) States that any State law, regulation, or order regarding the business of insurance shall apply to insurance activities conducted on Federal land or facilities in the United States and abroad, including military installations, unless it: (1) directly conflicts with any applicable Federal law, regulation, or authorized directive; or (2) would not apply if such activity were conducted on State land.
(Sec. 7) Declares that Congress intends that: (1) the States work collectively with the Secretary of Defense to ensure implementation of appropriate standards to protect members of the Armed Forces from dishonest and predatory insurance sales practices while on a U.S. military installation (including installations located outside of the United States); and (2) each State identify its role in promoting such standards in a uniform manner within 12 months after enactment of this Act.
Expresses the sense of Congress that the National Association of Insurance Commissioners (NAIC) should study and report to certain congressional committees on the extent to which States have met the requirement of promoting such State standards.
(Sec. 8) Prohibits an insurer or producer from selling or soliciting, in person, any life insurance product to any member of the Armed Forces on a Federal military installation unless written disclosures have been provided before the sale that: (1) subsidized life insurance may be available to such member from the Federal Government; (2) the Federal Government has in no way sanctioned, recommended, or encouraged the sale of the product being offered; (3) is in readily understandable language and in a type font at least as large as the font used for the majority of the policy; and (4) lists the address and phone number where consumer complaints are received by the State insurance commissioner for the State in which the individual has been issued a resident license or the entity is domiciled.
Requires the prohibition from further engagement in the insurance business with respect to Federal employees on Federal land of any individual or entity that has intentionally failed to provide these disclosures.
Exempts from such prohibition any insurance activities specifically: (1) contracted by or through the Federal Government or any State government; or (2) exempted from the applicability of this Act by a Federal or State law, regulation, or order that specifically refers to this Act.
Declares that, if a majority of the States have adopted, in materially identical form, a standard setting forth such required disclosures, after the expiration of the two-year period beginning on such majority adoption, the standard shall apply with respect to such States in lieu of the requirements of this Act, to the extent that it does not directly conflict with any applicable authorized Federal regulation or directive.
(Sec. 9) Expresses the sense of Congress that the NAIC should study and report to certain congressional committees on ways of improving the quality of and sale of life insurance products on Federal military installations, which may include limiting sales authority to companies and producers certified as meeting appropriate best practices procedures or creating standards for products specifically designed for members of the Armed Forces regardless of the sales location.
Directs the Comptroller General, if the NAIC does not submit its report, to study and report to such congressional committees on proposals to improve the quality and sale of such life insurance products.
(Sec. 10) Prohibits any insurer from contracting with an insurance producer that solicits or sells life insurance on U.S. military installations unless the insurer has implemented a system to report to the appropriate State insurance commissioner any disciplinary actions taken against the producer regarding such sales or solicitations.
Expresses the sense of Congress that, within two years after enactment of this Act, the States should implement collectively a system to: (1) receive reports of disciplinary actions taken against insurance producers by insurers or government entities with respect to the producers' sale or solicitation of insurance on a military installation; and (2) disseminate such information to all other States and to the Secretary of Defense.
(Sec. 11) Requires the Secretary of Defense to: (1) establish a registry of insurance agents and financial advisors that have been barred or banned from doing business on Federal military installations; and (2) notify the appropriate Federal and State regulatory agencies upon the inclusion or removal of an insurance agent or financial advisor in or from the registry.
(Sec. 12) Expresses the sense of Congress that Federal and State agencies responsible for insurance and securities regulation should provide advice to the appropriate Federal entities to consider: (1) significantly increasing the life insurance coverage made available through the Federal Government to members of the Armed Forces; (2) implementing appropriate procedures to encourage members of the Armed Forces to improve their financial literacy and obtain objective financial counseling before purchasing additional life insurance coverage or investments beyond those provided by the Federal Government; and (3) improving the benefits and matching contributions provided under the Thrift Savings Plan to members of the Armed Forces.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5011 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 5011
To prevent the sale of abusive insurance and investment products to
military personnel.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 7, 2004
Mr. Burns (for himself, Mr. Simpson, Mr. Edwards, Mr. Norwood, and Mr.
Wilson of South Carolina) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To prevent the sale of abusive insurance and investment products to
military personnel.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Military Personnel Financial
Services Protection Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Our military personnel perform great sacrifices in
protecting our Nation in the War on Terror and promoting
democracy abroad.
(2) Our brave men and women in uniform deserve to be
offered first-rate financial products in order to provide for
their families and save and invest for retirement.
(3) Our military personnel are being offered high-cost
securities and life insurance products by financial services
companies engaging in abusive and misleading sales practices.
(4) One securities product being offered to our service
members, the contractual plan mutual fund, has not been
marketed to civilians since the 1980s due to its exorbitant
fees. A 50% sales commission is assessed against the first year
of contributions, even though the average commission on a
mutual fund is less than six percent.
(5) If a mutual fund is too expensive for the civilian
market, then it is also too expensive for our men and women in
uniform.
(6) Certain life insurance products being offered to our
service members are being improperly marketed as investment
products. These products provide very low death benefits for
very high premiums that are front-loaded in the first few
years, making them completely inappropriate for most military
personnel.
(7) Regulation of these securities and life insurance
products and their sale on military bases has been clearly
inadequate and will require further Congressional legislation
to address.
SEC. 3. PROHIBITION ON FUTURE SALES OF PERIODIC PAYMENT PLANS.
Section 27 of the Investment Company Act of 1940 (15 U.S.C. 80a-27)
is amended by adding at the end the following new subsection:
``(j) Termination of Sales.--
``(1) Termination.--On and after 30 days after the date of
enactment of the Military Personnel Financial Services
Protection Act, it shall be unlawful--
``(A) for any registered investment company to
issue any periodic payment plan certificate; or
``(B) for such company, or any depositor of or
underwriter for any such certificate, or any other
person, to sell such a certificate.
``(2) No invalidation of existing certificates.--Paragraph
(1) shall not be construed to alter, invalidate, or otherwise
affect any rights or obligations, including rights of
redemption, under any periodic payment plan certificate issued
and sold before such date of enactment.''.
SEC. 4. STATE INSURANCE COMMISSIONER JURISDICTION ON MILITARY
INSTALLATIONS.
(a) In General.--Notwithstanding any provision of State law, any
authority of a State insurance department with respect to insurers or
insurance agents shall apply with respect to activities of insurers and
agents, notwithstanding that such activities take place on a military
installation of the United States or on any Federal land or facility,
except to the extent that such authority directly conflicts with any
applicable authorized Federal regulation or directive.
(b) Effective Date.--This section shall take effect on the date of
the enactment of this Act.
SEC. 5. REQUIRED DEVELOPMENT OF MILITARY PROTECTION STANDARDS.
(a) Required Disclosure.--Until a State has met its obligation
under subsection (b)--
(1) life insurance may not be sold on a military
installation in the State to any member of the armed forces
without prior disclosure to such member that subsidized life
insurance may be available to the member from the Federal
Government; and
(2) the State may not license or renew the license of any
entity that has violated the prohibition in paragraph (1).
(b) State Standards.--The Congress intends that each State, within
12 months after the date of the enactment of this Act, implement
standards to protect members of the armed forces, while on a military
installation of the United States or on any Federal land or facility,
from dishonest and predatory insurance sales practices.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by the Yeas and Nays: 68 - 0.
Reported (Amended) by the Committee on Financial Services. H. Rept. 108-725.
Reported (Amended) by the Committee on Financial Services. H. Rept. 108-725.
Placed on the Union Calendar, Calendar No. 445.
Mr. Baker moved to suspend the rules and pass the bill, as amended.
Considered under suspension of the rules. (consideration: CR H8104-8110)
DEBATE - The House proceeded with forty minutes of debate on H.R. 5011.
At the conclusion of debate, the Yeas and Nays were demanded and ordered. Pursuant to the provisions of clause 8, rule XX, the Chair announced that further proceedings on the motion would be postponed.
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Considered as unfinished business. (consideration: CR H8131)
Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 396 - 2 (Roll no. 496).(text: CR H8104-8106)
Roll Call #496 (House)On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 396 - 2 (Roll no. 496). (text: CR H8104-8106)
Roll Call #496 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.