Industry Pans SEC Proposed Disclosure Rule Information would have to be provided at the “point of sale”
By Matt Brady
The American Council of Life Insurers said last week that additional disclosures proposed by the Securities and Exchange Commission to be made at the “point of sale” could have a negative effect by overwhelming consumers with information.
In fact, the proposed disclosures potentially could serve to undermine already existing disclosure requirements that were implemented just last year, according to Carl Wilkerson, ACLI vice president and chief counsel for securities and litigation.
While acknowledging the proposal is well intentioned, “more disclosure is not better disclosure,” Wilkerson said.
Under the SEC proposal, broker-dealers would be required to provide customers with information regarding the costs and any conflicts of interest at the “point of sale” of mutual funds, college savings plans or variable insurance products. However, Wilkerson noted that the information is already made available to consumers from a variety of sources.
“Insurance and annuity purchasers have access to multiple sources of detailed information,” he said. “In addition to the point-of-sale document, consumers also receive a prospectus, a variable contract, buyers guides, NASD-approved sales literature and replacement disclosure forms when a replacement is involved.”
Wilkerson also noted that the SEC has not shown a regulatory need for the proposed new disclosures and that the research conducted by the SEC to demonstrate the need for added disclosures did not account for variable products. The ACLI noted that of the 33 consumers interviewed for research on the proposal, none had a variable annuity or variable life insurance policy.