FRH7_20220414_omb

Supporting Statement for the
Disclosure Requirements of Subpart H of Regulation H
(Consumer Protection in Sales of Insurance)
(FR H-7; 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), has extended for three years, with
revision, the Disclosure Requirements of Subpart H of Regulation H (Consumer Protection in
Sales of Insurance) (FR H-7; OMB No. 7100-298). The disclosure requirements, which are
codified at 12 CFR 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).
The Board revised the FR H-7 to account for one disclosure requirement in Regulation H,
Subpart H, that has not been previously cleared by the Board under the Paperwork Reduction Act
(PRA).
The current estimated total annual burden for FR H-7 is 5,371 hours, and would increase
to 5,513 hours with the revisions.
Background and Justification
Subpart H of Regulation H - Membership of State Banking Institutions in the Federal
Reserve System (12 CFR Part 208) was adopted by the Board in 2000 1 pursuant to section 305 of
the Gramm-Leach-Bliley Act of 1999 (GLBA), which required the federal banking agencies 2 to
issue joint regulations governing retail sales practices, solicitations, advertising, and offers of
insurance by, on behalf of, or at the offices of depository institutions. 3 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 implement section 305 of the GLBA and require Covered Persons to prepare and
provide certain disclosures in advertisements of insurance products, to consumers before the
completion of the initial purchase of an insurance product, 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.

1

See 65 FR 75822 (December 4, 2000).
The federal banking agencies are the Board, Office of the Comptroller of the Currency (OCC), and Federal Deposit
Insurance Corporation (FDIC).
3
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 banks, any Federal branch
and insured branch, and savings associations. The OCC and FDIC have separate regulations applicable to depository
institutions subject to their supervision.
2

Description of Information Collection
The insurance consumer protection rules in Regulation H require depository institutions
to prepare and provide certain disclosures to consumers.
Section 208.84(a). Requires Covered Persons to disclose before the completion of the
initial purchase of an insurance product or annuity by 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.
Section 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, and written disclosures may
be provided by mail within three business days after a transaction conducted by telephone.
Electronic disclosures are permitted, consistent with the requirements of 12 CFR 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 comprises state member banks or any other person at an office of a
bank or on behalf of a bank (collectively, Covered Persons).
Revisions to the FR H-7
The Board revised the FR H-7 to account for one disclosure requirement in Regulation H,
Subpart H, that has not been previously cleared by the Board under the PRA. The Board did not
create any forms associated with the FR H-7 to address this requirement.
Section 208.84(d). Requires the disclosures contained in section 208.84(a) to be included
in advertisements and promotional material for insurance products or annuities unless the
advertisements and promotional materials are of a general nature describing or listing the
services or products offered by the bank.

2

Time Schedule for Information Collection
This information collection contains three 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.
Public Availability of Data
There is no data related to this information collection that is made available to the public
by the Board.
Legal Status
The Disclosure Requirements of Subpart H of Regulation H are authorized by section
305 of the GLBA, which requires that the Board issue regulations, including disclosu re
requirements, applicable to retail sales practices, solicitations, advertising, or offers of insurance
by depository institutions (12 U.S.C. § 1831x).4 The disclosures required under Subpart H of
Regulation H are mandatory.
Because the FR H-7 disclosures are provided by state member banks to customers,
confidentiality issues should generally not arise. In the event the records are obtained by the
Board as part of the examination or supervision of a financial institution, this information may be
considered confidential pursuant to exemption 8 of the Freedom of Information Act, which
protects information contained in “examination, operating, or condition reports” obtained in the
bank supervisory process (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
The Board consulted with the other federal banking agencies with similar regulations
pursuant to section 305 of the GLBA.
Public Comments
On October 5, 2021, the Board published an initial notice in the Federal Register (86 FR
54978) requesting public comment for 60 days on the extension, with revision, of the FR H-7.
The comment period for this notice expired on December 6, 2021. The Board did not receive any
comments. The Board adopted the extension, with revision, of the FR H-7 as originally
proposed. On January 25, 2022, the Board published a final notice in the Federal Register (87
FR 3809).

4

The Board also has the authority to require reports from state member banks (12 U.S.C. §§ 248(a) and 324).

3

Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for FR H-7 is 5,371 hours,
and would increase to 5,513 hours with the revisions. The Board estimates that the total number
of respondents is equal to the number of state member banks who reported positive insurance
fees on income reports in the prior calendar year. The Board estimates that each such state
member bank, on average, will make approximately 630 disclosures under sections 208.84(a)
and (b) each year. Using an estimate of one and a half minutes for each of these disclosures, the
estimated annual burden for insurance and extension of credit burden disclosures is 5,371 hours.
Related to advertisements, the Board estimates that each respondent that engages in such activity
will advertise the products or annuities once per year and that ensuring the proper disclosure as
described in section 208.84(d) takes 25 minutes. The estimated annual burden for advertisements
disclosures is 142 hours. These disclosure requirements represent less than 1 percent of the
Board’s total paperwork burden.
Estimated
Annual
number of
frequency
respondents5

FR H-7
Current
Sections 208.84(a) and 208.84(b)

Estimated
average time
per response

Estimated
annual burden
hours

341

630

1.5 minutes

5,371

341
341

630
1

1.5 minutes
25 minutes

5,371
142
5,513

Proposed
Sections 208.84(a) and 208.84(b)
Section 208.84(d)
Proposed Total
Change

142

The estimated total annual cost to the public for the FR H-7 is $324,677, and would
increase to $333,261 with the revisions.6
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
5

Of these respondents, 270 are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.
There are no special accommodations given to mitigate the burden on small institutions.
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 $21, 45% Financial Managers at
$74, 15% Lawyers at $71, and 10% Chief Executives at $102). 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 2021, published March 31, 2022, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are
defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

4

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.

5