Financial services company supervisors should look carefully at sales involving money that came from an inheritance or a retirement plan cashout, according Financial Industry Regulatory Authority Chairman Richard Ketchum.
Ketchum spoke Wednesday in Baltimore at an annual conference organized by FINRA, Baltimore.
Ketchum talked about FINRA’s ongoing battle over companies and sales representatives ensuring that the variable annuities sold to consumers suit the needs of the consumers.
FINRA put a VA sales practices rule into effect in mid-2008.
Since then, “we have uncovered inadequate compliance policies and procedures,” Ketchum said, according to a written version of his speech posted on the FINRA site. “We also have found that some firms failed to obtain customer information, such as information about customers’ liquidity needs and tolerance for risk.”
In some cases, Ketchum said, FINRA has encountered unsuitable sales recommendations.