A regulation proposed by the Financial Industry Regulatory Authority could expand suitability mandates so broadly that they would cover all investment product recommendations.
The National Association of Fixed Annuities, Milwaukee, has voiced that concern in a member alert.
NAFA fears the proposed regulation could apply to any service or strategy used in connection with a firm’s business, regardless of whether the service or strategy involves securities.
FINRA says the proposal, Regulatory Notice 09-25, Proposed Consolidated FINRA Rules Governing Suitability and Know-Your-Customer Obligations, is part of efforts to develop a new consolidated FINRA rulebook.
The proposal comment period ends June 29.
NAFA sees the proposal as “a clear attempt to take control – read collect fees – on all product recommendations,” including recommendations involving life insurance, long term care insurance, health insurance, property-casualty insurance, savings accounts and fixed annuities, NAFA officials say.