Mr. Enzi. Mr. President, I rise today with my colleague from New York to introduce the Military Personnel Financial Services Protection Act of 2005. This bill is needed to protect our military personnel and their families from unscrupulous financial products. Over the past year, it has become increasingly clear to many that the lack of oversight in this area has allowed certain individuals to push high cost financial products on unknowing military personnel. This practice must be stopped. Our soldiers and their families deserve much better, especially during a time when so many of them are serving at home and overseas to protect our freedom.
The bill that we introduce today will halt completely the sale of a mutual fund-like product that charges a 50 percent sales commission against the first year of contributions by a military family. Currently, there are hundreds of mutual fund products available on the market that charge less than six percent . The excessive sales charges of these contractually based financial products make them susceptible to abusive and misleading sales practices.
In addition, certain life insurance products are being offered to our service members disguised and marketed as investment products. These products provide very low death benefits while charging very high premiums, especially in the first few years. Many of these products are unsuitable for the insurance and investment needs of military families.
One of the major problems with the sale of insurance products on military bases is the confusion of whether state insurance regulators or military base commanders are responsible for the oversight of sales agents. Typically, military base commanders will bar certain sales agents from a military base only to have the sales agents show up at other military facilities. Since there is no record of the bar, state insurance regulators have been unable to have adequate oversight of the individuals. The bill that we introduce today will solve that problem. It will state clearly that state insurance regulators have jurisdiction of the sale of insurance products on military bases.
The bill will also urge state insurance regulators to work with the Department of Defense to develop life insurance product standards and disclosures. The Department of Defense will keep a list of individuals who are barred or banned from military bases due to abuse or unscrupulous sales tactics and to share that list with Federal and State insurance, securities and other relevant regulators.
Finally, the bill that we are introducing today will protect our military families by preventing investment companies from issuing periodic payment plan certificates, the mutual fund-like investment product with extremely high first year costs. This type of financial instrument has been criticized by securities regulators since the late 1960s.
It should be noted that there are many upstanding financial and insurance companies that sell very worthwhile investment and insurance products to military families. They should be applauded for the fine job that they do in helping our military members and their families. This bill is targeted at the few who abuse the system and prey upon our military.
Congress is fully aware of the dangers faced by our military personnel in keeping our country safe from harm. Likewise, we must do all that we can to arm our soldiers when they face the dangers of planning for their financial futures.
Mr. President, I urge my colleagues to take up this bill immediately so that we can help our men and women in the military and their families.