The American Council of Life Insurers, Washington, is recommending that a centralized command regulate sales of all financial services on military bases.[@@]
“The notion of asking 50 state insurance regulators to implement new standards to protect military personnel from insurance sales misconduct is unnecessary and probably unwanted by all the regulators involved,” ACLI President Frank Keating said Thursday at a U.S. House Financial Services Committee subcommittee hearing on soldiers’ finances, according to a written version of his remarks.
Adding “50 new state rules in addition to existing rules will not better protect our servicemen and women if neither the states nor the Defense Department can enforce any rule,” Keating said.
Keating told lawmakers they should use a centralized command to serve as the liaison and coordinate financial service sales supervision, handle complaints and provide regulatory assistance with the financial service functional regulators.
“Under this approach, an infraction by a sales agent or company on a military installation is not an isolated incident receiving an arbitrary evaluation,” Keating said. “Rather it becomes an incident reported to multiple regulators and multiple installation commanders; it is subjected to fair and certain adjudication; and it could result in license revocation or penalties that sting. The cracks in the system become sealed and misbehavior is rooted out, not to find fertile ground on another installation or in another state or foreign country.”
The Financial Services subcommittee on capital markets, insurance and government sponsored enterprises held the soldier finances hearing to respond to press reports about unsuitable and high-pressure financial services sales tactics on military bases.
House Financial Services Committee Chairman Michael Oxley, R-Ohio, emphasized his interest in the allegations.
“It is unconscionable, if true, that groups of recruits have been marched into compulsory briefings on veterans’ benefits by salesmen pretending to be financial planners that quick-step them into signing up for what turns out to be long-term life insurance,” Oxley said. “It is also unconscionable, if true, that firms are using retired military officers to make on-base sales pitches to groups of young recruits for mutual funds with 50% first-year commissions.”
But Oxley conceded that abusive financial services sales practices have been under review since 1974.
Keating talked about one report on the topic that is 4 years old.
“It should have been clear that alleged insurance problems required something of state insurance regulators as well as Defense officials,” Keating said.
Elizabeth Jetton, a representative for the Financial Planning Association, Denver, said her group believes Congress should consider “granting states the authority to regulate insurance sales practices on military bases.”
Joe Dunlap, executive vice president of operations for American Amicable Life Insurance Company of Texas, Waco, Texas, a company that sells life insurance on military bases, also talked about the role of state regulators.
Dunlap expressed support for a bill that would give state regulators a stronger role in regulating on-base life insurance sales.
Dunlap, whose company was caught up in the investigations, argued that the agents implicated in the investigations constitute only a small part of its agent network.