(Related: State Regulator Group Keeps Life Out of Sales Standards Project)
A group for indexed annuity supporters â€” the Fixed Annuity Consumer Choice (FACC) campaign â€” has released a major proposal for improving annuity sales standards.
FACC members are hoping their proposal will change how state insurance regulators are approaching the issue.
The U.S. Department of Labor (DOL) was trying to require financial professionals to â€śact in clientsâ€™ best interestâ€ť when helping clients with retirement savings. Many life insurance agents who sell annuities argued that the DOL best interest guidelines would have eliminated sales commissions, and exposed agents to hindsight-based lawsuits, without doing much to help retirement savers.
Now that the DOL has given up on its best interest effort, the U.S. Securities and Exchange Commission (SEC) has been trying to fill the void with the â€śRegulation Best Interestâ€ť project.
State insurance regulators have been working to develop a proposal of their own, through the National Association of Insurance Commissionersâ€™ Annuity Suitability Working Group. The working group has been framing its proposal as an update of the NAICâ€™s existing model annuity sales standards â€” the Suitability in Annuity Transactions Model Regulation (Model Number 275).
In the past, the SEC tried to classify all indexed annuities as securities, and regulate them as securities.
FACC members organized fly-ins and other advocacy efforts. They helped persuade Congress to block the SEC effort. Congress approved a law that, in practice, lets issuers have annuities that offer guaranteed minimum crediting rates regulated as insurance products, not as securities.
FACC members were also active players in the effort to fight the DOL best interest guidelines.
Like the NAICâ€™s Annuity Suitability Working Group, FACC members areÂ packaging their proposal as an update of the NAICâ€™s model suitability regulation.
But, in some respects, campaign members are taking a much different approach.
For a look at seven key points from the proposal, see the idea cards in the slideshow above.
â€” Read Life Agents Should Not Face ANY Best Interest Standard: Annuity Group, on ThinkAdvisor.
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