Senate panel OKs financial protection bill
Family members and troops are a step closer to protections from unscrupulous insurance and financial product salespeople, courtesy of a bill approved by a key Senate committee.
The Senate Committee on Banking, Housing and Urban Affairs approved the Military Personnel Financial Services Protection Act on June 14. The measure now goes to the full Senate for consideration.
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By Karen Jowers
Times staff writer
Similar legislation was passed by the House a year ago.
The Senate bill includes protection for family members as well as troops. For example, it calls for written disclosures to troops and family members about the costs and benefits of products; the ability to cancel contracts that violate the law; better record-keeping on registration, disciplinary actions and other data on brokers and dealers; and improved systems for sharing information among the states, the Defense Department and financial regulators.
The legislation “provides long-overdue protection for our men and women in uniform,” said committee chairman Sen. Richard Shelby, R-Ala.
“For years, men and women in the armed services have fallen victim to unscrupulous salespersons pushing high costs and unnecessary financial products and life insurance,” Sen. Mike Enzi, R-Wyo., said in a prepared statement. “This practice must be stopped.”
He first introduced the bill in February 2005, but the Senate took no action on it last year.
Enzi said the aggressive practices addressed by the bill often target young and naive troops who are particularly vulnerable to high-pressure sales tactics, Enzi said.
To make matters worse, he said, these salespeople violate or ignore Pentagon directives and state regulations, with few repercussions.
“This bill is targeted at the few who abuse the system and prey upon our military,” Enzi said, adding that it would target the “bad actors” and add much-needed transparency and communication between agencies.
The bill requires actions by the Defense Department and the insurers themselves, and encourages actions by the states and the National Association of Insurance Commissioners not only to institute protections but also to make sure they are enforced.
For example, anyone selling insurance, securities or other financial products on military installations would have to provide full disclosure to troops or family members. That would include the fact that the government provides alternative insurance options.
Also, sales representatives would have to inform service members and family members that the government has not recommended the sales of their products.
The bill would specifically ban sales of periodic payment plans in the military community. These investment plans require an upfront fee of half of the first year’s investment, in addition to yearly fees.
The Senate bill adds another protection for troops and their families: If the sale of a life insurance product violates the law, the service member or adult family member has the option to cancel the contract.
Aside from that, if a federal or state agency or court determines that someone violated the law, that person would be banned from selling insurance to federal employees on federal property.