The Financial Industry Regulatory Authority is gearing up to impose new regulations on variable annuity sellers.
The U.S. Securities and Exchange approved a FINRA VA sales practices rule Friday, according to SEC officials.
The new FINRA VA suitability rule will affect broker-dealers that sell deferred variable annuities.
The new rule will require broker-dealer firms to:
- Make sure that a client actually needs a deferred variable annuity, rather than some other product.
- Set standards for principal review and create a requirement that broker-dealer firm principals review transactions before a customer’s application is forwarded to the issuing insurance company for processing.
- Establish and maintain specific written supervisory procedures reasonably designed to achieve compliance with the standards set forth in the proposed rule.
- Develop and document training policies or programs designed to ensure compliance with the requirements of the rule and salespersons’ understanding of the features of deferred variable annuities.