Internal Control Questionnaires and Verification Procedures

Product Selection

1. Does the bank select the products to be offered?

2. If so, does the selection process make use of predetermined criteria that consider the customers’ needs?

3. Does a qualified committee or an analyst who is independent of the sales function make the product selections?

4. If the bank uses outside consultants to help select products, does bank management determine if the consultant receives compensation from product issuers or wholesalers?

5. If another party, such as a clearing broker or third party vendor, performs the product selection analysis, does bank management understand and agree with the analysis method?

6. Does the bank conduct continuing reviews of product offerings to assure that they remain acceptable and are such reviews done at least annually?

7. Does bank management consider, as part of the selection process, the product issuer’s contingency plans for dealing with unusual surges in redemptions?

8. Are these contingency plans based on various market scenarios?

   1. Emergency staffing?

   2. Additional communications capabilities?

   3. Enhanced operational support?

9. Does the analysis of fixed and variable rate annuities include a determination of the credit quality of the issuing insurance company?

10. Does the analysis of fixed and variable rate annuities include determining whether the issuing insurance company can sell or simply transfer the annuity contract to another insurance company?

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