Consumer groups are clashing with financial services groups about when new federal variable life and variable annuity sales regulations should take effect.[@@]
The U.S. Securities and Exchange Commission has proposed an Oct. 24 effective date.
The American Council of Life Insurers, Washington, and the Securities Industry Association, Washington, have asked the SEC for what they say is a “reasonable extension,” but a coalition of consumer groups led by the Consumer Federation of America, Washington, says the SEC already has taken 5 years to address their concerns.
Granting financial services industry requests for an extension “would further delay the long-overdue application of appropriate investor protections to advisory services offered by brokers,” Barbara Roper, director of investor protection at the Consumer Federation, and representatives for the 3 other groups in the coalition, write in their comment letter.
The controversy concerns a new regulation that will govern sales of variable life insurance and variable annuities through financial planners and through discretionary brokerage accounts.
Under the new regulation, a broker-dealer that provides investment advice and delivers a financial plan to a customer as part of a financial plan or as part of financial planning services must follow the SEC rules governing investment advisors when working with that customer.
The ACLI is asking for a 6-month delay in enforcement of the new regulation, and it says complying with the new regulation by Oct. 24 would be overly burdensome for companies and broker-dealers to achieve.