In a comment letter to the Federal Reserve concerning its proposed interpretation of anti-tying restrictions, ICBA commended the agency for clarifying the rules but reminded the Fed that its regulatory focus should be on the large banks whose size and market share have a greater potential for anticompetitive behavior.
The Bank Holding Company Act generally prohibits a bank from conditioning the availability or price of one product on a requirement that the customer also obtain another product from the bank or an affiliate of the bank. For example, a bank cannot condition the availability of a loan (or a discount on the loan) on the requirement that the customer also purchase insurance from the bank or an affiliate. Banks are permitted, however, to offer "bundled" pricing for traditional bank products.
In an attempt to clarify the anti-tying rules, the Fed proposed an interpretation that included examples of many tie-ins that are legal. For example, a bank may condition the availability or price of a loan on a requirement that the customer maintain a specified deposit balance or that the customer obtain cash management or trust services from the bank or its affiliates. In both cases, the bank's actions are permissible because the tied products are traditional bank products. Also, banks may offer mixed-product arrangements that give the customer the option to choose which products (traditional or non-traditional) to purchase as long as the customer has a meaningful choice of traditional or non-traditional products.
The Fed recommends that banks adopt policies and procedures to comply with the tying rules, including education and training programs for employees, internal audits, and compliance personnel to review the bank's marketing materials and individual transactions. Citing the enormous regulatory burden of community banks, ICBA urged that the anti-tying policies, procedures and systems appropriate for a particular bank should depend on the bank's size and the scope and complexity of its activities.