The American Council of Life Insurers will be asking federal regulators to reject a proposed variable annuity sales suitability regulation developed by the National Association of Securities Dealers.[@@]
The U.S. Securities and Exchange Commission, which has the authority to approve or disapprove NASD rules, published the proposed suitability regulation Thursday in the Federal Register. The proposed regulation would impose stricter supervision requirements on broker-dealers and managers than the current regulation does.
The comment period for the proposed rule closes Aug. 11. The SEC usually offers much longer comment periods for proposed rules that it develops on its own. The SEC tries to act within 35 days of publishing an NASD rule, but it has the authority to extend that period if it desires, an industry official says.
The fact that the SEC has allowed only a 3-week comment period seems to imply that the agency plans to move swiftly to implement a final rule after the comment period ends.
However, Carl Wilkerson, chief counsel for securities and litigation at the ACLI, says the NASD proposal is “an exercise in regulatory grandstanding.”
“At this point, our position is that we will strongly oppose this,” Wilkerson says.
The NASD has improved the proposal by dropping a VA risk disclosure statement included in a draft released in April, but the ACLI still opposes the remaining suitability provision, Wilkerson says.
The risk disclosure provision would have required VA sellers to give consumers a 2-page document outlining fees and charges at the point of sale. The document would have duplicated the fee table appearing in each variable annuity prospectus, Wilkerson says.