DoD Directive 1344.7

1

• DoD Directive 1344.7
• Personal Commercial Solicitation
• on
• DoD Installations
• Colonel Michael A. Pachuta, USAF
• Office of the Under Secretary of Defense
• (Personnel and Readiness)

2
Personal Commercial Solicitation on DoD
InstallationsOverview

• Background
• Actions to date
• Proposed directive changes
• Public comments
• GAO audit recommendations
• Pending legislation
• The way ahead
• SEC visits

3
Personal Commercial Solicitation on DoD
Installations Background

• Jul 1996 USAREUR IG Report of Inquiry
• Sep 1998 Academy Life suspended DoD-wide
• Mar 1999 DoD IG report (insurance sales)
• May 2000 Cuthbert report
• Jun 2001 DoD IG report (insurance allotments)
• Mar 2003 Draft policy revision

4
Personal Commercial Solicitation on DoD
Installations Background (Cont.)

• Nov 2003 Public Law 108-136, Sec 586
• May 2004 GAO audit
• Jul 2004 NY Times investigative reports
• Aug 2004 Public Law 108-287, Sec 8133
• Sep 2004 House Financial Services
  Subcommittee Hearing
• Jan 2005 Second GAO audit

5
Personal Commercial Solicitation on DoD
Installations Actions to Date

• Aug 2000 Solicitation revocation reporting
  policy
• Jan 2001 DoD solicitation working group
• Nov 2001 DFAS insurance allotment SOP
• Apr 2002 DoD financial education policy
• Mar 2003 Initial proposed changes sent to
  Services
• May 2003 DoD financial readiness campaign
• Aug 2003 Public meeting on existing directive
• Mar 2004 Commercial sponsorship policy
• May 2005 Public meeting on proposed changes

6
Personal Commercial Solicitation on DoD
Installations Proposed Directive Changes

• Incorporate enforcement reporting policy
• Incorporate financial education policy
• Incorporate commercial sponsorship policy
• Incorporate off-base financial institution
  advertising guidance (FMR)
• Add prohibition against phone, fax, e-mail
  contact
• Add solicitation evaluation form

7
Personal Commercial Solicitationon DoD
Installations Sample of Public Comments

• Dont give banks/credit unions a competitive
  edge
• Ensure due process when barring companies/agents
• Require IMSA membership to solicit insurance
• Let insurance agents provide financial education
• Monitor insurance/investment product lapse
  rates
• Allow 501(c) 19 organizations to teach
  financial ed
• Ban all on-base life insurance solicitation
• End overseas 50-agent and CONUS experience
  rules
• Sign solicitation eval form under penalty of
  perjury

8
Personal Commercial Solicitationon DoD
Installations GAO Audit Recommendations

• Maintain data base on all solicitation
  violations
• Report all violations to State/Fed authorities
• Clarify allotment 7-day cooling off period
  policy
• Modify coding to track life insurance
  allotments
• Re-emphasize allotment acceptance policy

9
Personal Commercial Solicitationon DoD
Installations Pending Legislation

• H.R. 458
• Prohibits sale of periodic payment plans
• NAIC/States must develop military protection
  standards
• DoD must establish barred company/agent data base
  
• Amendment 1347 to S. 1042
• Financial education at basic and follow-on
  training
• Full-time financial counselors
• Mandatory E-4 and below insurance allotment
  counseling

10
Personal Commercial Solicitationon DoD
Installations The Way Ahead

• Accept or reject public comments
• Obtain OMB approval of proposed final rule
• Provide Congress at least 30-days notice
• Publish final rule when statutorily permitted

11
Personal Commercial Solicitationon DoD
Installations SEC Visits

• SEC visiting 7 CONUS and 16 OCONUS bases
• Visiting on-base and off-base securities sellers