Some longtime defenders of indexed annuities are trying to head off efforts to impose any new requirements for insurance agents to act in clients’ best interest.
The annuity defenders, at the Fixed Annuity Consumer Choice (FACC) Campaign, are trying to get attention for their position: that regulators should stick with the current suitability for fixed annuities, and end efforts to apply a best interest standard to agents.
FACC has put out a new comment letter describing the best interest proposals now under consideration at the U.S. Securities and Exchange Commission and at the National Association of Insurance Commissioners as “essentially a reincarnation” of the U.S. Department of Labor’s fiduciary rule.
A three-judge panel at the 5th U.S. Circuit Court of Appeals issued a decision last week that appears to kill the DOL rule.
“Best interest is a fiduciary concept,” FACC says in a letter commenting on the 5th Circuit decision. “Many have admitted best interest is just another means by which to impose fiduciary standards and duties on agents.”
Insurance agents already have a legal duty to provide clients with accurate information, provide full disclosure, and ensure that any recommendations are suitable and meet a client’s needs and objectives, FACC says.
“But agents are not fiduciaries and should not be saddled with fiduciary obligations that will only beget confusion and litigation, and in the end destroy the vitality of the fixed insurance industry and deprive consumers of high quality fixed insurance products,” FACC says.