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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5011 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 5011

  To prevent the sale of abusive insurance and investment products to 
                          military personnel.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 7, 2004

Mr. Burns (for himself, Mr. Simpson, Mr. Edwards, Mr. Norwood, and Mr. 
  Wilson of South Carolina) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
  To prevent the sale of abusive insurance and investment products to 
                          military personnel.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Military Personnel Financial 
Services Protection Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Our military personnel perform great sacrifices in 
        protecting our Nation in the War on Terror and promoting 
        democracy abroad.
            (2) Our brave men and women in uniform deserve to be 
        offered first-rate financial products in order to provide for 
        their families and save and invest for retirement.
            (3) Our military personnel are being offered high-cost 
        securities and life insurance products by financial services 
        companies engaging in abusive and misleading sales practices.
            (4) One securities product being offered to our service 
        members, the contractual plan mutual fund, has not been 
        marketed to civilians since the 1980s due to its exorbitant 
        fees. A 50% sales commission is assessed against the first year 
        of contributions, even though the average commission on a 
        mutual fund is less than six percent.
            (5) If a mutual fund is too expensive for the civilian 
        market, then it is also too expensive for our men and women in 
        uniform.
            (6) Certain life insurance products being offered to our 
        service members are being improperly marketed as investment 
        products. These products provide very low death benefits for 
        very high premiums that are front-loaded in the first few 
        years, making them completely inappropriate for most military 
        personnel.
            (7) Regulation of these securities and life insurance 
        products and their sale on military bases has been clearly 
        inadequate and will require further Congressional legislation 
        to address.

SEC. 3. PROHIBITION ON FUTURE SALES OF PERIODIC PAYMENT PLANS.

    Section 27 of the Investment Company Act of 1940 (15 U.S.C. 80a-27) 
is amended by adding at the end the following new subsection:
    ``(j) Termination of Sales.--
            ``(1) Termination.--On and after 30 days after the date of 
        enactment of the Military Personnel Financial Services 
        Protection Act, it shall be unlawful--
                    ``(A) for any registered investment company to 
                issue any periodic payment plan certificate; or
                    ``(B) for such company, or any depositor of or 
                underwriter for any such certificate, or any other 
                person, to sell such a certificate.
            ``(2) No invalidation of existing certificates.--Paragraph 
        (1) shall not be construed to alter, invalidate, or otherwise 
        affect any rights or obligations, including rights of 
        redemption, under any periodic payment plan certificate issued 
        and sold before such date of enactment.''.

SEC. 4. STATE INSURANCE COMMISSIONER JURISDICTION ON MILITARY 
              INSTALLATIONS.

    (a) In General.--Notwithstanding any provision of State law, any 
authority of a State insurance department with respect to insurers or 
insurance agents shall apply with respect to activities of insurers and 
agents, notwithstanding that such activities take place on a military 
installation of the United States or on any Federal land or facility, 
except to the extent that such authority directly conflicts with any 
applicable authorized Federal regulation or directive.
    (b) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.

SEC. 5. REQUIRED DEVELOPMENT OF MILITARY PROTECTION STANDARDS.

    (a) Required Disclosure.--Until a State has met its obligation 
under subsection (b)--
            (1) life insurance may not be sold on a military 
        installation in the State to any member of the armed forces 
        without prior disclosure to such member that subsidized life 
        insurance may be available to the member from the Federal 
        Government; and
            (2) the State may not license or renew the license of any 
        entity that has violated the prohibition in paragraph (1).
    (b) State Standards.--The Congress intends that each State, within 
12 months after the date of the enactment of this Act, implement 
standards to protect members of the armed forces, while on a military 
installation of the United States or on any Federal land or facility, 
from dishonest and predatory insurance sales practices.
                                 <all>
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