OFIR Consumer Protection Tops 2008 Accomplishments

Lansing, MI (CompNewsNetwork) – Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross today released the agency's eight key accomplishments for 2008. Ross said the agency continued to provide firm but fair regulation of the state's financial industries along with a high degree of consumer protection.

"While financial market turmoil had investors white-knuckling their way through much of 2008, OFIR ramped up key efforts to protect Michigan consumers," Ross said. "We scored big in 2008 by regulating loan officers for the first time, partnering with the AARP to fight investor fraud and brokering an Auction Rate Securities deal with Comerica Securities that provided millions in relief to thousands of Michigan investors."

OFIR's eight key accomplishments for '08 include:

OFIR and AARP Michigan started a "Free Lunch Seminar Monitor" program, which gives individuals an opportunity to fight back against unscrupulous promoters by reporting questionable investment practices in their communities to state securities authorities for investigation.

The Free Lunch Senior Monitor program enlists the help of Michigan seniors, who will attend seminars and report back to OFIR whether investors are being pressured into purchasing inappropriate or unsuitable investments. Participants can bring a checklist with them to help assure that both the products promoted at free investment seminars, as well as the promoters, conform to securities laws and regulations. Information from the checklists will be forwarded to OFIR for evaluation

Investment Scams Training for Law Enforcement

OFIR developed and provided free training for Michigan law enforcement officials, "Securities 101: Recognizing Securities Products and Investment Crimes," which helped them identify the most common types of securities fraud, how these schemes are structured and marketed, how to spot a questionable investment deal, and how OFIR's Securities Section can assist them in their efforts. OFIR has also planned a securities training for Michigan prosecutors that will take place this year.

Investor Education in Your Community program

OFIR's Investor Education in Your Community program educated investors on how to improve their personal finances and how to avoid falling victim to investment fraud. Over 1,000 Michigan investors attended these seminars at over 50 different libraries across the state. OFIR also ran a workshop focusing on emerging scams and con artists at WWJ's highly successful Michigan Money Summit. Over 400 people attended the summit.

Comerica Bank Auction Rate Securities Settlement
OFIR reached a settlement with Comerica Bank regarding $1.46 billion in Auction Rate Securities (ARS). The settlement required Comerica Bank to offer full buybacks to any customer who purchased an ARS from Comerica Securities (a subsidiary of Comerica Bank).  The Auction Rate Securities market collapsed in 2007, freezing consumers' access to their accounts. Comerica was also required to pay the State of Michigan a civil penalty of $10,000 and $100,000 to the Michigan Investor Protection Trust Fund.

The settlement represents a major victory for Michigan investors who bought auction rate securities through Comerica. The agreement ensures that all Michigan consumers who made these investments will be able to put this nightmare behind them.

Consumer Assistance

OFIR recovered $17,487,531 on behalf of Michigan consumers in 2008. $6,782,777 of the recoveries involved insurance and securities products and the remaining $10,704,754 involved mortgage and banking products. The $17 million in consumer recoveries is a record for the agency, which was created in 1999. The recoveries were based on 7,113 complaints resolved by the agency during the year. OFIR consumer protection recoveries include dollars recovered by OFIR for consumers filing insurance, security, bank, credit union and mortgage company complaints. 

OFIR staff also answered nearly 110,000 consumer calls in 2008 and has answered more than 1 million calls since the agency's inception.

Bank and Credit Union Directors Training
OFIR co-sponsored the inaugural "Michigan Bank Directors' College." The training included sessions on: Legal Liability/Ethics, Exam Preparation and The Changing Environment of Bank Regulation. OFIR also co-sponsored a similar Credit Union Directors' College. As bank and credit union operations, products, services and regulations grow in complexity, OFIR has focused on the manner in which boards of directors carry out their responsibilities.

Electronic Insurance Filing and Registration

OFIR announced that beginning April 1, 2009, all insurance rates, rules, and policy forms that are required to be filed must be electronically submitted to OFIR via the System for Electronic Rate and Form Filing (SERFF). Electronic filing will save time and money for both OFIR and insurers. OFIR also announced that beginning October 29, 2008 all resident and non-resident individual insurance producer licensee applications must be filed electronically via the National Insurance Producer Registry (NIPR) Gateway. Electronic application filing is a major aspect of the National Association of Insurance Commissioners' uniformity initiative for state insurance departments.

Loan Officer Registration/ National Mortgage Licensing System

OFIR worked closely with the state legislature to ensure the passing of a 13-bill package which is designed to help protect Michigan consumers from mortgage fraud by requiring the state's estimated 10,000 mortgage loan officers to register with OFIR.  The package creates the state's first list of loan originators and mandates criminal background checks, education and testing for loan officers. It also establishes a mortgage industry advisory board that will make recommendations to OFIR on educational requirements, applications and tests for loan officers and requires loan officers to be registered before April 1, 2009 in order to receive compensation for originating a loan.

Michigan loan officer registration applicants are now able to file registration applications through the National Mortgage Licensing System, a national database established to accept and retain license/registration applications and data for the mortgage industry. 

The Federal SAFE Act was passed July 2008 that requires states to comply with certain common standards by August 1, 2009.  The changes include use of the NMLS and mandatory fingerprinting for FBI background investigations.  It will also require use of a standard examination approved by NMLS and standard pre registration/licensure and continuing education credits with pre approval of all course work by NMLS.

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