FDIC Proposes New Rules for Bank Ads

WASHINGTON —  With surveys showing substantial consumer confusion about federal insurance of mutual funds sold by banks, the Federal Deposit Insurance Corp. on Tuesday proposed new rules for bank advertisements.

Under the proposal, banks would have to clearly segregate insured products, such as checking accounts, from uninsured products, like mutual funds, in their ads. Banks would be prohibited from mentioning FDIC insurance in ads solely concerning uninsured products.

Some regulators questioned whether the proposal, released for comment at an FDIC board meeting, would do much to alleviate the widespread confusion.

“The area of disclosure is extremely complex in terms of what the consumer actually feels and learns,” Comptroller of the Currency Eugene Ludwig said after the meeting. “I’m very wary that we not impose burdens unless we are generally getting some benefit out of it.”

Ludwig and FDIC Chairman Ricki Helfer suggested the agency might consider requiring banks to state in ads that certain products are not insured by the federal government.

Almost one-third of consumers thought uninsured bank mutual funds were protected by deposit insurance, according to a survey conducted last year by Princeton Survey Research and cited by agency staff.

The FDIC proposal also asked for comment about banks promoting products on the Internet. About 200 banks have set up pages on the World Wide Web, the agency said.

Staff members said the agency’s rules about print, radio and television advertisements ought to apply to Web sites as well, but the agency did not propose any rules for the Internet on Tuesday. Comments are due within 60 days.