FRH7_20190430_omb

Supporting Statement for the
Disclosure Requirements of Subpart H of Regulation H
(Consumer Protections in Sales of Insurance)
(FR H-71; OMB No. 7100-0298)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, the Disclosure Requirements of Subpart H of Regulation H (Consumer
Protections in Sales of Insurance) (FR H-7; OMB No. 7100-0298). The disclosure requirements,
which are codified at 12 CFR Part 208.81 et seq., apply to the sale of insurance by a state
member bank or by any other person at an office of the bank or on behalf of the bank
(collectively, Covered Persons). There are no required forms associated with this information
collection (the FR H-7 designation is for internal purposes only). The estimated total annual
burden for the FR H-7 is 12,947 hours.
Background and Justification
Subpart H of Regulation H - Membership of State Banking Institutions in the Federal
Reserve System was adopted by the Board in 20002 pursuant to section 305 of the GrammLeach-Bliley Act of 1999 (GLBA), which required the federal banking agencies3 to issue joint
regulations governing retail sales practices, solicitations, advertising, and offers of insurance by,
on behalf of, or at the offices of insured depository institutions.4 Section 305 applies to any
depository institution and any person selling, soliciting, advertising, or offering insurance
products or annuities to a consumer at an office of a depository institution or on behalf of the
institution. As required by section 305 of the GLBA, the insurance consumer protection rules in
Regulation H require Covered Persons to prepare and provide certain disclosures to consumers
before the completion of the initial sale of an insurance product or annuity to a consumer and at
the time a consumer applies for an extension of credit in connection with the solicitation, offer,
or sale of an insurance product or annuity.
This information is not available from other sources.
Description of Information Collection
The insurance consumer protection rules in Regulation H require depository institutions
to prepare and provide certain disclosures to consumers.
1

The internal Agency Tracking Number previously assigned by the Board to this information collection was
“Reg H-7.” The Board is changing the internal Agency Tracking Number for the purpose of consistency.
2
See 65 FR 75822 (December 4, 2000).
3
The federal banking agencies are the Board, Office of the Comptroller of the Currency (OCC), and Federal
Deposit Insurance Corporation (FDIC).
4
See Public Law No. 106-102, which added section 47 to the Federal Deposit Insurance Act, codified at 12 U.S.C.
1831x. Section 305 applies to all depository institutions, including national banks, state member banks, state
nonmember banks, and savings associations. The OCC and FDIC have separate regulations governing this subject
for depository institutions subject to their supervision.

12 CFR Part 208.84(a). Requires Covered Persons to disclose before the completion of
the initial sale of an insurance product or annuity to a consumer that (1) the insurance product or
annuity is not a deposit or other obligation of, or guaranteed by, the bank or an affiliate of the
bank, (2) the insurance product or annuity is not insured by the FDIC or any other agency of the
United States, the bank, or (if applicable) an affiliate of the bank, and (3) in the case of an
insurance product or annuity that involves an investment risk, there is investment risk associated
with the product, including the possible loss of value.
12 CFR Part 208.84(b). Requires Covered Persons to disclose at the time a consumer
applies for an extension of credit in connection with which an insurance product or annuity is
solicited, offered, or sold, that the bank may not condition an extension of credit on either (1) the
consumer’s purchase of an insurance product or annuity from the bank or any of its affiliates or
(2) the consumer’s agreement not to obtain, or a prohibition on the consumer from obtaining, an
insurance product or annuity from an unaffiliated entity.
Both of the above disclosures generally must be made orally and in writing, and must be
readily understandable and meaningful, as defined by the regulation. In the case of transactions
conducted by mail, the regulation does not require oral disclosures. Electronic disclosures are
permitted, consistent with the requirements of 12 CFR Part 208.84(c)(4). Institutions are also
required to obtain a written acknowledgment by the consumer that the consumer received the
disclosures or, in certain circumstances, to obtain an oral acknowledgment.
Respondent Panel
The FR H-7 panel is comprised of state member banks and other persons.
Time Schedule for Information Collection and Publication
This information collection contains two mandatory disclosure requirements, which are
triggered by the events described above. In connection with the in-person sale of an insurance
product or annuity, both the oral and written disclosures must be made immediately. In the case
of transactions conducted by telephone, oral disclosures must be made at the time of the sale, and
written disclosures must be provided by mail within three business days of the sale of the
insurance product or annuity, beginning on the first business day after the sale, excluding
Sundays and legal public holidays.
Legal Status
Section 305 of the GLBA requires that the Board issue regulations, including disclosure
requirements, applicable to retail sales practices, solicitations, advertising, or offers of insurance
by depository institutions. (12 U.S.C. 1831x). The disclosure requirements described above are
contained in Subpart H of the Board’s Regulation H. (12 CFR Part 208, Subpart H). The
disclosures required under Subpart H of Regulation H disclosures are mandatory.
Because the FR H-7 disclosures are provided by state member banks to customers,
confidentiality issues should generally not arise. However, if any institution-specific information

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is obtained by the Board during an examination of a state member bank, such information may
be protected under exemption (b)(8) of the Freedom of Information Act, which exempts from
disclosure materials related to the examination of financial institutions (5 U.S.C. 552(b)(8)).
Consultation Outside of the Agency
There has been no consultation outside the agency.
Public Comments
On October 17, 2018, the Board published an initial notice in the Federal Register
(83 FR 52452) requesting public comment for 60 days on the extension, without revision, of the
FR H-7. The comment period for this notice expired on December 17, 2018. The Board did not
receive any comments. On February 5, 2019, the Board published a final notice in the Federal
Register (84 FR 1734).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR H-7 is 12,947
hours. The Board estimates that each state member bank, on average, will make approximately
630 such disclosures each year. Using an estimate of one and a half minutes for each disclosure,
a state member bank would spend on average about 16 hours per year making these disclosures.
These disclosure requirements represent less than 1 percent of the Board’s total paperwork
burden.

FR H-7
Insurance (208.84(a)) and
Extension of Credit
(208.84(b))

Estimated
number of
respondents5

Annual
frequency

Estimated
average time
per response

Estimated
annual burden
hours

822

630

1.5 minutes

12,947

The estimated total annual cost to the public for this information collection is $745,747.6
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
5

Of these respondents, 561 are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets), www.sba.gov/document/support--table-size-standards. The
Federal Reserve System did not make efforts to minimize burden on small entities in this collection.
6
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $19, 45% Financial Managers at
$71, 15% Lawyers at $69, and 10% Chief Executives at $96). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2018, published March 29, 2019, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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Estimate of Cost to the Federal Reserve System
Because the Federal Reserve does not collect any information, there is no estimated cost
to the Federal Reserve System.

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