ACME Bank's Compliance with Consumer Protection in Sales of Insurance
Question
ACME Bank would like its tellers to help sell insurance products to new and existing customers. The tellers would refer customers to personal bankers who have insurance licenses from the state. The bank would like to reward tellers by giving them a small percentage of the commission for each policy sold where the sale resulted from a referral. Which of the following statements presents ACME's biggest concern in complying with the Consumer Protection in Sales of Insurance regulation?
Answers
Explanations
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A. B. C. D.D
The biggest concern for ACME Bank in complying with the Consumer Protection in Sales of Insurance regulation would be ensuring that the bank's referral program does not violate any laws or regulations related to the sale of insurance products.
Out of the options provided, option D - "Tellers should not be rewarded only when the referral results in a sale" - appears to be the most relevant concern from a compliance perspective.
According to the Consumer Protection in Sales of Insurance regulation, insurance sales practices must be fair, transparent, and in the best interest of the customer. One way to ensure this is to avoid any incentives that may encourage tellers to make referrals that are not in the best interest of the customer or that do not comply with regulatory requirements.
If tellers are rewarded only when a referral results in a sale, there may be a risk that they will make referrals without fully assessing the customer's needs and suitability for the insurance product. This could result in the sale of unsuitable or unnecessary insurance products, which could harm the customer and potentially violate regulatory requirements.
To comply with the regulation, ACME Bank would need to ensure that its referral program incentivizes tellers to make appropriate referrals that are in the best interest of the customer and comply with regulatory requirements. For example, the bank could consider rewarding tellers for making referrals that result in a customer consultation with a licensed personal banker, rather than just a sale.
It is worth noting that while the other options provided (A, B, and C) may also be relevant concerns for ACME Bank, they do not appear to be as directly related to compliance with the Consumer Protection in Sales of Insurance regulation.
Option A, the difficulty of obtaining an insurance license, is not directly related to the bank's compliance with the regulation, as it is the personal banker who would need to have an insurance license.
Option B, the challenge of tellers handling many types of products, may be a concern from an operational or customer service perspective, but it does not appear to be directly related to compliance with the regulation.
Option C, the physical separation of insured deposit products from insurance products, may be a concern from a product management or marketing perspective, but it also does not appear to be directly related to compliance with the regulation.
