The Office of the Comptroller of the Currency released an interpretive letter in June stating that a product offering from a national bank’s insurance affiliate did not violate anti-tying rules. Interpretive Letter #991, dated March 11, responded to an inquiry about a solicitation offering a discount on insurance products offered by the bank’s affiliate to customers with loans extended by the bank’s mortgage subsidiary. Because the offer came from a non-bank affiliate, it did not violate bank anti-tying provisions. The insurance company’s offer explicitly stated that the customer was not obligated to purchase insurance and that the insurance offered was not a condition or requirement of the mortgage loan.

The anti-tying provisions, found in Section 106 of the Bank Holding Company Act Amendments of 1970, prohibit a bank from conditioning the availability of or varying the consideration charged for any product or service on the condition that a customer obtain an additional product or service from the bank or an affiliate. Although the Federal Reserve Board originally extended application of the anti-tying provisions to bank holding companies and non-bank affiliates, that regulation was repealed in 1997. Citing increased competition in the financial services markets, the Board felt application of the anti-tying provisions to non-bank companies was no longer justified.

The OCC letter states that an offer from a bank to lower interest rates on loans for customers who also purchased insurance from an affiliate would violate the anti-tying provisions. However, when the offer comes from the non-bank affiliate, as in this case, it does not violate the statute.