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 on Sept. 7, according to SEC officials.
The new FINRA VA suitability rule will affect broker-dealers that sell deferred variable annuities.
The new rule will allow 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.
“The new rule applies to sales to all investors and not just to seniors,” SEC officials say.
The SEC has published the order approving the new rules in Release Number 34-56375, which relates to File Number SR-NASD-2004-183.