House OKs Military Sales Bill

Keating says he views the bill as “a key component of reform. We all want to help ensure that our soldiers are not coerced into purchasing financial products ill-suited to them and, just as importantly, that they have access to the life insurance products they want and need.”

In addition to imposing rules designed to stop what supporters say are abusive sales practices, H.R. 5011, the “Military Personnel Financial Services Protection Act,” would bar the sales of contract mutual funds, a product that lawmakers noted has virtually disappeared from the civilian market, and require that agents disclose that neither they nor their products are endorsed by the U.S. government or military. Additionally, the bill requires the Department of Defense and state regulators to maintain lists of banned agents and to share those lists with one another.

“This is an important step in guaranteeing that our young service members are protected from investment products with exorbitant commissions and from life insurance agents who push our soldiers into unnecessary and high-priced policies, frequently while trying to circumvent state regulation,” says Rep. Max Burns, R-Ga., who introduced the bill. “There’s no reason that any company selling these questionable plans can’t replace them with reputable products, as was the case in the civilian market.”

The bill came to the floor from the House Financial Services Committee, which approved the bill by a unanimous vote last week. Rep. Michael Oxley, R-Ohio, the chairman of the Financial Services panel, says Burns’ bill “will address this critical issue by helping to put an end to the long-standing problem of unscrupulous securities and life insurance firms who have been taking financial advantage of the men and women in our armed forces.”

Burns’ bill would place jurisdiction for sales on military bases with the states in which those bases are located. For sales taking place on military bases overseas, authority would rest with the regulator of the state in which the buyer has residence or the state that granted the agent involved a resident license.

Links to the text of the bill and other information about the bill are on the Web at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.05011: