1557-0220 Supporting Statement 6-1-22

Supporting Statement

Consumer Protections for Depository Institution Sales of Insurance

12 CFR Part 14

OMB Control No. 1557-0220

A. Justification.

1. Circumstances that make collection necessary:

These information collections are required under section 305 of the Gramm-Leach-Bliley Act (GLB Act), 12 U.S.C. 1831x. Section 305 of the GLB Act requires the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation (collectively, the Agencies) to prescribe joint consumer protection regulations that apply to retail sales practices, solicitations, advertising, and offers of any insurance product by a depository institution or by other persons performing these activities at an office of the institution or on behalf of the institution (other covered persons). Section 305 also requires those performing such activities to disclose certain information to consumers (e.g., that insurance products and annuities are not FDIC-insured).

This information collection requires national banks, Federal savings associations, and other covered persons involved in insurance sales, as defined in 12 CFR 14.20(f), to make two separate disclosures to consumers. Under § 14.40, a national bank, Federal savings association, or other covered person must prepare and provide orally and in writing: (1) certain insurance disclosures to consumers before the completion of the initial sale of an insurance product or annuity to a consumer and (2) certain credit disclosures at the time of application for the extension of credit (if insurance products or annuities are sold, solicited, advertised, or offered in connection with an extension of credit).

2. Use of the information:

Consumers use the disclosures to understand the risks associated with insurance products and annuities and to understand that they are not required to purchase, and may refrain from purchasing, certain insurance products or annuities in order to qualify for an extension of credit.

3. Consideration of the use of improved information technology:

National banks, Federal savings associations, and other covered persons may use any technology that is reasonable and appropriate for its circumstances so long as the method is consistent with 12 CFR 14 and facilitates consumer receipt and response.

4. Efforts to identify duplication:

These disclosures are unique and cover the particular circumstances of the national bank, Federal savings association, or other covered person. No duplication with other regulatory requirements exists.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden.

There are no alternatives that would result in lowering the burden on small institutions, while still accomplishing the purpose of the rule.

6. Consequences to the Federal program if the collection were conducted less frequently:

The frequency of disclosure is required by the GLB Act. Less frequent collection would violate the statute.

7. Special circumstances necessitating collection inconsistent with 5 CFR part 1320:

Not applicable.

8. Efforts to consult with persons outside the agency:

On March 8, 2022, the OCC published a notice for 60 days of comment concerning the collection, 87 FR 13040. No comments were received.

9. Payment to respondents:

Not applicable. There is no payment to respondents.

10. Any assurance of confidentiality:

The information will be kept private to the extent permitted by law.

11. Justification for questions of a sensitive nature:

There are no questions of a sensitive nature.

12. Burden estimate:

This information collection involves two elements.

First, printed disclosure materials must conform to the requirements of the regulation. The insurance disclosures are required 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 or Federal savings association.

The OCC estimates the burden associated with an institution reviewing and updating its materials as follows:

401 respondents @ 1 response = 401 responses

401 responses @ 1 burden hours = 401 burden hours

Second, national banks, federal savings associations, and other covered persons must make certain disclosures to consumers. The OCC is using a figure of 240 disclosures on average, annually, and one minute per disclosure. This totals four hours per institution. The OCC is using this figure of four hours per institution only as a marker to show that it has considered the requirements imposed by the statute and the regulations and has included them in this request for OMB approval. The market is so diverse and institutions vary so much in activity level that only a large survey would result in accurate estimates of transactions. The OCC believes that since the disclosures are needed and required by statute, and since its flexibility to modify the disclosures is limited by the statute, any survey of disclosure activity is unwarranted and would unnecessarily burden national banks.

401 respondents @ 1 response = 401 responses

401 responses @ 4 burden hours = 1,604 burden hours

TOTAL BURDEN:

401 respondents @ 1 response = 401 responses

401 responses @ 5 burden hours = 2,005 burden hours

The OCC estimates the cost of the hour burden to respondents as follows:

2,005 hours x $114.17 = $ 228,910.85

To estimate wages, the OCC reviewed May 2020 data for wages (by industry and occupation) from the U.S. Bureau of Labor Statistics (BLS) for credit intermediation and related activities (NAICS 5220A1).  To estimate compensation costs associated with the rule, the OCC uses $114.17 per hour, which is based on the average of the 90th percentile for six occupations adjusted for inflation (2 percent as of Q1 2021), plus an additional 33.4 percent for benefits (based on the percent of total compensation allocated to benefits as of Q4 2020 for NAICS 522: credit intermediation and related activities).

13. Estimate of annualized cost to respondents (capital start-up and operation/maintenance):

National banks, Federal savings associations, and other covered persons use readily available equipment to comply with these information collections.

14. Estimate of annualized costs to the Federal Government:

None.

15. Change in burden:

Former Burden: 10,189 burden hours

New Burden: 2,005 burden hours

Difference: - 8,184 burden hours

The change in the burden estimate is due to fewer banks involved in offering insurance products or annuities.

16. Information regarding collections whose results are planned to be published for statistical use:

The OCC has no plans to publish the information for statistical use.

17. Display of expiration date:

None.

18. Exceptions to certification statement:

None.

B. Collections of information employing statistical methods.

Not applicable.