The American Council of Life Insurers, Washington, wants federal regulators to keep communication between broker-dealers and customers as simple as possible.[@@]
The ACLI is one of many groups that have submitted comments on a proposal by the U.S. Securities and Exchange Commission that would require broker-dealers to give customers who buy mutual funds, variable insurance products, 529 college savings plans and other products more information at the “point of sale.”
Carl Wilkerson, an ACLI vice president, has submitted a comment arguing that the SEC proposal could undermine disclosure requirements that were implemented in 2004.
The proposal is well intentioned, but “more disclosure is not better disclosure,” Wilkerson writes in the ACLI comment.
Under the SEC proposal, broker-dealers would be required to provide customers with information regarding costs and any conflicts of interest during the sale of affected financial products.
But consumers already get the same information from a variety of sources, Wilkerson writes.
“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 writes.
Wilkerson adds 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 cover variable insurance products. None of the 33 consumers that the SEC interviewed while studying the proposed rules had a variable annuity or variable life insurance policy, Wilkerson writes.
But a consortium of consumer groups is praising the SEC’s disclosure proposal.
“Information that is relevant to the selection of the financial professional, including information about the practices they engage in that create conflicts of interest, should be required to be provided prior to the engagement, as it is for investment advisors,” the consortium, which includes Consumers Union, Yonkers, N.Y., writes in its comment. “Information relevant to the purchase of a particular product?including but by no means limited to information about distribution related costs and financial incentives that may influence the product selection?should be provided at the point when that purchase is recommended.”