On June 17, President Obama unveiled a sweeping package of regulations aimed at the financial services industry. A brief summary of the regulations includes:
- Letting the states retain much of their current regulatory oversight.
- Creation of a new department, the Office of National Insurance, which has been proposed to act as a government watchdog to nearly every aspect of the industry.
- Further empowerment of the Federal Federal Reserve Board to oversee companies that might pose a future risk, and subject them to more stringent rules.
- Creation of a new “Consumer Financial Protection Agency,” which could cover products such as variable annuities.
As the dust begins to settle, some two weeks later, let’s review what some of the industry experts say about the new regulations and what it would mean to advisors:
- “This will set us on the right path towards a modern, efficient and consumer-oriented regulatory program,” said Frank Keating, ACLI president. “[We] appreciate [the] commitment to work towards modernization of insurance regulation, based on the principles of national uniformity, efficiency, effective oversight of systematic risk and better international cooperation.”
- “State regulations’ solvency system and consumer protections have served consumers well, as evidenced by the relative stability of the insurance market,” NAIC chief executive Pamela Banks said. “We are pleased that a council of regulators with functional expertise is included in the proposal, but urge inclusion of state insurance regulators to offer expertise and information on the insurance markets.”
- “… We need to ensure that we get effective regulation, not just more regulation. Unless it’s effective, layering on more and more bureaucracy will do more harm than good,” NAVA president Cathy Weatherford said.
- “What new consumer protections will be gained by a new standard?” asked NAIFA officials. “As we have learned from recent weeks and months, there have been several instances where individuals who had a fiduciary obligation to their clients have been charged, and in some cases, found guilty of fraud. Is it possible to legislate morality?”
As you read about the regulations and how the industry experts are responding, does it give you a warm and fuzzy feeling? How do you envision it impacting your practice? Let us hear what you think.