Rick Ketchum told annuity industry executives Monday that regulation of all types of annuities should be more uniform.
Ketchum, chairman of the Financial Industry Regulatory Authority, Washington, spoke in Washington at a conference organized by NAVA Inc., Reston, Va.
Ketchum praised the work NAVA has done to promote consumer awareness of annuities and high ethical standards in the annuity industry.
But he said FINRA believes more must be done to eliminate annuity regulatory gaps.
“America’s 90 million investors should receive the same level of protection no matter which financial services or products they select,” Ketchum said, according to a written version of his remarks. “Yet our current system of financial regulation has created an environment in which investors are left without those consistent and effective protections.”
It is not clear why the level of protection should vary depending on the type of product bought, or whether the consumer is working with an investment advisor, a broker-dealer, a banker or an insurance agent, Ketchum said.
“We can debate what the basic protections should be,” Ketchum said. “But I think that a rational starting point would be that every person who provides financial advice and sells a financial product is tested, qualified and licensed; the advertising for financial products and services is not misleading; every product marketed to them is appropriate for recommendation to that investor; and there is full and comprehensive disclosure for the services and products being marketed.”
FINRA reviews variable annuity sales materials for balance and fairness, the sales rep who sells the product must pass a licensing exam and participate in continuing education, and many other disclosure and review requirements apply, Ketchum said.