The Financial Industry
Regulatory Authority has decided to put off enforcing a proposed deferred
variable annuity sales review regulation until 180 days after it rewrites the
regulation.
The proposed regulation,
Rule 2821(c), would require that a FINRA member firm principal review the
suitability of each deferred VA application within 7 business days after the
customer had signed the application and before the application had been
submitted to the insurance company.
“A number of firms asserted
that 7 business days beginning from the time when the customer signs the
application may not allow for a thorough principal review in all cases,” FINRA
officials write in an explanation of the decision to postpone implementation of
the proposed rule. “These firms asked that a different timing mechanism be
used.”
Some commenters also
questioned whether the proposed rule should apply to broker-dealers that do not
make investment recommendations to customers and do not employ principals to
perform suitability reviews, officials write.
FINRA now is preparing to
respond to those concerns and others by proposing “substantive amendments” to
Rule 2821 and wants to notify member firms that they can wait until a later
date to comply with the rule, officials write.
FINRA is the product of a
merger of the National Association of Securities Dealers, Washington, and the regulatory arm of the
New York Stock Exchange.
Rule 2821(c) is part of Rule
2821, a package of proposed deferred VA suitability and supervision guidelines,
which was approved by the U.S. Securities and Exchange Commission in September
2007.
The rule originally was set
to take effect May 5. In January, the SEC let FINRA postpone implementation of
Rule 2821(c) until Aug. 4.
The new notice will push
implementation back till October or later.
FINRA’s new Variable Annuity
Rule requires that financial institutions train their registered
representatives on deferred variable annuities. Rule 2821 requires
organizations and agents to understand the requirements of the new rule and
establish a schedule for compliance training. They must also have a
record-keeping system in place.
Developed by industry experts, Quest CE’s Deferred Variable
Annuity Training Program allows supervisors and registered representatives
to complete the training module online at their convenience. Once a student
successfully completes a course, they may print a certificate of completion for
their records. Additionally, student progress and completions can be monitored
by compliance administrators online, and all records are maintained through
Quest CE’s online record-keeping solution.
Quest CE’s Deferred Variable Annuity
Training Program was designed to help financial professionals understand the
suitability issues that affect the sale or exchange of deferred variable
annuities.
With Quest CE’s two training modules, one
for supervisors and one for producers, companies can ensure compliance with
FINRA Rule 2821.
Quest CE offers
customized education and online
compliance management programs to financial service firms
across the country. With over 100 clients in the insurance, mutual fund,
and banking industries, we have the resources and expertise necessary to create
and administer successful training programs for you.
For more information about FINRA Rule 2821
from Quest CE, go to www.questce.com or www.deferredvariableannuitytraining.com. You may also contact Quest CE at 877-593-3366
or via email at mkufahl@questce.com .
