WASHINGTON BUREAU — Insurance groups are asking Congress to change and clarify the Consumer Financial Protection Agency proposal, to ensure that no insurance product comes under the agency’s authority.
The Treasury Department’s CFPA proposal already contains a provision excluding activities involved in the “business of insurance” from the authority of the proposed agency.
But the current CFPA proposal language says the activities of companies and individuals that underwrite and sell “mortgage, title and credit insurance” would come under CFPA authority, the groups write in a letter sent to the chairmen and highest-ranking Republican members of the House Financial Services Committee and the Senate Banking Committee.
The letter also was sent to Treasury Secretary Timothy Geithner.
The insurance groups want the provision putting mortgage, title and credit insurance under CFPA jurisdiction removed.
The groups also are expressing concern in their letter about the possibility that, unless the language of the current bill is further tightened, there is the risk that other forms of insurance could come under CFPA jurisdiction.
Industry groups believe that a company or individual that is deemed to be a “financial advisor” that “provides financial or other related advisory services” or “tax-planning” services would come under the authority of the proposed agency, the groups write in their letter.
One concern is that, to the extent the CFPA’s authority covers products that do not involve a direct extension of credit, “the slippery-slope” debate over the intended scope of the proposed legislation will likely generate lengthy litigation, where the courts will ultimately make that determination, the groups write.
This is especially true in situations in which the definitions of terms such as “financial advisor,” “business of insurance” and “credit insurance” leave room for interpretation and confusion, the groups write.