The Financial Industry Regulatory Authority is still deciding how to handle supervision requirements for the variable annuity sales process, officials say.

FINRA, Washington, gave a brief update about progress on deferred variable annuity compliance work in a review of the organization’s 2008 compliance examination program priorities.

FINRA is the product of a merger of the National Association of Securities Dealers, Washington, and the regulatory arm of the New York Stock Exchange.

FINRA says it is continuing to review public comments on the proposed Rule 2821 deferred VA suitability and supervision guidelines.

“FINRA hopes to conclude its analysis of comments regarding the principal review provision and determine whether additional amendments to Rule 2821 are appropriate in the near future,” FINRA officials say in the exam priorities update.

Rule 2821, which was approved by the U.S. Securities and Exchange Commission in September 2007, would make many changes in the rules governing member firms’ sales of deferred VA contracts.

The rule originally was set to take effect May 5.

The SEC agreed in January to let FINRA postpone implementation of a principal review provision, Rule 2821(c), until Aug. 4.

Rule 2821(c) would require that a member firm principal review the suitability of each deferred VA application within 7 business days after the customer has signed the application and before the application has been submitted to the insurance company.

The American Council of Life Insurers, Washington, and member companies have argued that implementing the provision would be complicated.

Carl Wilkerson, an ACLI vice president, has written to the SEC to ask it to get FINRA to postpone implementation of the entire proposed rule.

“There is not an emergency situation that needs rushed action,” Wilkerson writes. “The current suitability and supervision rules can properly protect consumers.”

Elsewhere in the FINRA exam priorities update, FINRA says it will take a hard look at a variety of issues of interest to seniors and to baby boomers, including life settlements, sales representatives’ use of designations, “sales pitches masquerading as educational seminars,” and situations in which “investors in or approaching retirement are solicited with misrepresentations or omissions about the risks of withdrawing retirement funds for reinvestments into products that may be unsuitable.”

But FINRA also says its staffers have found evidence that many broker-dealers have implemented practices that could help ensure compliance and protect older consumers.