State insurance regulators have expanded the long-running U.S. financial services sales standards fight, by trying to answer frequently asked questions (FAQs) about their own new annuity sales standards model.
The Annuity Suitability Working Group — an arm of the National Association of Insurance Commissioners (NAIC) — has put the FAQ answer drafting project on the agenda for a web conference meeting scheduled for July 29.
- Links to documents related to the Annuity Suitability Working Group’s activities are available here.
- An article about NAIC approval of the Suitability in Annuity Transactions Model Regulation update is available here.
The working group has included a draft of the FAQ answers in a meeting packet.
Here are three things to know about the drafting effort, and the draft.
1. The History
The current effort descends from efforts by the Obama-era U.S. Department of Labor to impose a fiduciary rule on all sales of products that could be used in retirement, and separate rules that could have put tight restrictions on the indexed annuity market.
The administration of President Donald Trump let the Obama-era fiduciary rule die in court.
The U.S. Securities and Exchange Commission developed an alternative, Regulation Best Interest, that’s friendlier to use of sales commissions, and annuities.
The NAIC developed an update of an existing annuity sales standard model, the Suitability in Annuity Transaction Model Regulation (Model Number 275), in an effort to beef up requirements for annuity sellers to act in the interests of the clients, and to tell clients about potential conflicts of interest.
Trump’s Labor Department recently unveiled an “Impartial Conduct Standards” regulation draft that, like the NAIC’s model update, is supposed to wrap around Reg BI. The new Labor Department draft would apply solely to rollovers of assets from workers’ retirement accounts into other arrangements.