The Financial Industry Regulatory Authority says an insurer ought to be able to keep new reps from replacing their existing customers’ variable annuities from the “old companies” without using the existing customers’ personal information.
Officials at FINRA, Washington, give that advice in FINRA Regulatory Notice 07- 36.
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.
The new notice is a sequel to a notice that the NASD issued in February. In the earlier notice, which is now designated FINRA Notice To Members 07-06, officials warned NASD member companies to pay close attention to sales recommendations made by new reps who had been hired away from competitors.
A rep’s new company must work to stop 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, officials write in the February notice.
When a rep shifts from one company to another, the rep might have trouble servicing the old products and also might have trouble collecting commissions from the old company, officials observe.