Many Banks Fail To Warn Investors
More than one out of four banks fall short when it comes to warning customers about the risks of buying mutual funds and other investments, according to a survey released Monday by the Federal Deposit Insurance Corp.
The report on the yearlong survey on the sale of investments by banks said that 28 percent of the customers were not told that mutual funds are not protected by federal deposit insurance. Such coverage protects savings accounts and certificates of deposit up to $100,000 in the case of a bank failure.
In 30 percent of the cases, banks failed to tell customers that stocks, mutual funds and other investments aren’t obligations of the bank.
The survey found the problems were greatest when investors talked with bankers over the telephone. It said only 46 percent of customers were told on the phone that Wall Street investments lacked FDIC deposit insurance.
“These results need to be improved,” FDIC Chairman Ricki Helfer said in a statement.