Bill to Regulate Financial Services On Military Bases Heads to U.S. Senate Floor
By Paul RizzoPayday Loan Writer
A measure that could change the rules governing sales of life insurance policies and other products such as military payday loans to members of the U.S. armed forces won unanimous approval from the Senate Banking Committee.
The Senate military sales bill, S. 418, contains a stronger set of consumer protection provisions than a similar bill passed by the House in June 2005.
It is likely to face prompt Senate floor action, possibly before Congress adjourns for its July 4 recess.
If the bill passes, leaders will have to set up a conference committee to resolve differences between the House and Senate versions.
Supporters of the changes in the military sales rules hope a conference committee will set to work before Congress starts its month-long August recess. S. 418, also known as the Military Personnel Financial Services Protection Act, was introduced by Senators Michael Enzi, a Wyoming Republican, and Hillary Clinton, Democrat of New York State.
Advocates of the bill say it would make reforms that would help regulators on the state level and the U.S. Department of Defense police sales to the personnel on military bases and eliminate unfair and/or deceptive financial services to members of the armed forces.
"I think the provisions of this bipartisan bill are crucial for the protection of our armed forces and their families," Enzi said.
The Senate bill would bar the sale of contract mutual funds, which carry unusually high fees in early years and require a lengthy contribution for the buyer to see any real value. Contract mutual funds critics' say the products are unsuitable for someone being sent into combat or who may be from base to base quite often.
The bill also:
- … encourages increased communication between state regulators and defense authorities regarding the controversial insurance, mutual fund and military payday loan services.
- … states that a military base falls under the jurisdiction of the insurance department of the state in which it is located.
- … requires the Department of Defense to maintain a list of individuals who have been barred from a base for unfair sales practices.
The House bill contains a provision dealing with predatory lending. The Senate bill is silent on that issue, however, as its members later plan to address predatory lending in another legislative measure. The lending provision in the House bill deals with matters such as payday loans and does not appear to affect insurance products.
Insurance industry groups have supported S. 418, applauding the Senate Banking Committee for moving forward a bill that curtails abusive life insurance and mutual fund sales practices on military base grounds.
"The soldiers protecting us deserve no less than a full commitment to help them financially, which is why life insurers strongly support S. 418," said Frank Keating, president of the American Council of Life Insurers.
