In an upcoming issue of Senior Market Advisor our contributing writer, David Port, will delve into the latest regulatory issues involving the financial industry in general and annuities in particular. While that piece won’t be out for a few more weeks, I wanted to whet your appetites with what his investigating uncovered on SEC 151A.

Below are Port’s findings on the controversial subject:

Any discussion of regulatory issues surrounding fixed index annuities usually starts and ends with Rule 151A–in particular, whether the SEC ultimately will decide FIAs are securities.

Back in 2008, the commission stated its intent to treat FIAs as securities starting in January 2011, but that ruling was put into limbo by a court decision late last year. The SEC has since delayed implementation of the new policy until at least 2013, pending further review. Meanwhile, legislation introduced and still pending in both houses of the U.S. Congress would codify that FIAs are insurance products, not securities, thereby preventing the SEC from making a move to regulate them.

How will the case shake out? “Anyone who tells you they know the answer to that is crazy,” says Jason Lea, senior vice president at Broker’s Service Marketing Group.

The 151A delay represents a reprieve for index annuity producers, who under the new SEC policy would have been required to get their Series 6 and 63 licenses to sell the product if they didn’t have them already.

Advisors who are active in the FIA market and don’t want to wait for a resolution to the 151A situation can circumvent the uncertainty by earning their Series 6 and Series 63 licenses, says Lea. Not that such a step is necessary at this point, however. “I think it’s kind of premature to do that now, since we’re at least two-and-a-half years away” from potential implementation of any revisions to Rule 151A.

In the meantime, says Lea, the best course for advisors with regard to FIA regulation is to meet their current compliance responsibilities while taking the initiative to voice their opinions on Rule 151A to policymakers in Washington. “Get involved. It sound hokey, but talking to your U.S. congressman or U.S. senator about the issue is the most important thing you can do.”