Insurance industry groups are welcoming an announcement that the Financial Industry Regulatory Authority has delayed indefinitely implementation of parts of its new variable annuity marketing rule because it plans to propose amendments to the controversial provisions in the near future.
Being delayed are amendments to the rule’s suitability and supervision provisions. The provisions were scheduled to go into effect Aug. 4.
Other parts of the rule, Number 2821, will go into effect as scheduled May 5, according to Gary Sanders, senior counsel of the National Association of Insurance and Financial Advisors, Falls Church, Va. and Carl Wilkerson, chief counsel-securities and litigation, at the American Council of Life Insurers, Washington.
Sanders says NAIFA supports FINRA’s request for a delay in the effective date of paragraphs (c) and (d) of Rule 2821 to enable FINRA to reexamine the rule and propose substantive changes to these sections.
“NAIFA commends FINRA’s efforts to be responsive to concerns raised regarding these provisions, and believes it is more important to get things right than to adhere to arbitrary timetables and effective dates,” Sanders says.
Herb Perone, a spokesman for FINRA, says the decision to delay implementation of the rule was “sudden,” and said it was made to give broker-dealers as much notice as possible that they wouldn’t have to implement the suitability and supervision provisions.
Producers will now have until 6 months after the changes to the provisions are finalized to implement the provisions.
According to lawyers at Goodwin, Procter, which specializes in securities practices, concerns voiced by the industry about the regulation have focused on: