§ 2.3 - Distribution of credit life insurance income.

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Distribution of credit life insurance income by a national bank must be consistent with the requirements and principles of this section.

It is an unsafe and unsound practice for any director, officer, employee, or principal shareholder of a national bank (including any entity in which this person owns an interest of more than ten percent), who is involved in the sale of credit life insurance to loan customers of the national bank, to take advantage of that business opportunity for personal profit. Recommendations to customers to buy insurance should be based on the benefits of the policy, not the commissions received from the sale.

Except as provided in §§ 2.4 and 2.5(b), and paragraph (d) of this section, a director, officer, employee, or principal shareholder of a national bank, or an entity in which such person owns an interest of more than ten percent, may not retain commissions or other income from the sale of credit life insurance in connection with any loan made by that bank, and income from credit life insurance sales to loan customers must be credited to the income accounts of the bank.

The requirements of paragraph (c) of this section do not apply to a director, officer, employee, or principal shareholder if:

The person is employed by a third party that has contracted with the bank on an arm's-length basis to sell financial products on bank premises; and

The person is not involved in the bank's credit decision process.

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§ 2.4 - Bonus and incentive plans.