The Financial Industry Regulatory Authority says insurers ought to be able to keep new reps from replacing existing customers’ variable annuities without using the customers’ personal information.
Officials at FINRA, Washington, give that advice in FINRA Regulatory Notice 07-36.
The new notice is a sequel to a notice FINRA issued in February. In the earlier notice, FINRA officials write about the importance of financial services companies keeping close tabs on registered representatives who have been hired away from competitors.
A rep’s new company must work to prevent the rep from replacing customers’ mutual funds, variable annuities and variable life insurance policies simply because the funds and variable products were issued by the rep’s old company, FINRA officials write in FINRA Notice To Members 07-06.
FINRA is the self-regulatory group formed when the National Association of Securities Dealers, Washington, merged with the compliance arm of the New York Stock Exchange.
When a rep shifts from one company to another, the rep might have trouble servicing the old products and also might have trouble collecting trail commissions from the old company.