The FACC Campaign is an unincorporated alliance of insurance agents, independent marketing organizations, insurers, and industry advocates seeking to protect the availability of fixed annuities by ensuring any standard of conduct regulations adopted by applicable regulators recognize and appropriately align with fixed annuity distribution through independent agents and marketing organizations.

The FACC Campaign is an unincorporated alliance of insurance agents, independent marketing organizations, insurers, and industry advocates seeking to protect the availability of fixed annuities by ensuring any standard of conduct regulations adopted by applicable regulators recognize and appropriately align with fixed annuity distribution through independent agents and marketing organizations.

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FACC Supports Independent Insurance Producers

We have commented extensively on prior drafts of this regulation as it has evolved over the past couple years and, while we still have reservations along the lines described in those prior comment letters, we appreciate the proposed regulation is improved and headed closer to adoption by the NAIC.  In this letter we wish to offer targeted suggestions for improvement and also comment more generally on a few open concerns.  Most importantly, we wish to put forward our proposed clarifications for Section 6A which we believe will make the regulation more viable and practical for independent distribution. 

FACC believes it is essential to clarify that agents do not need to obtain any securities license in order to comply with these new regulatory requirements so as to ensure consumers will continue having access to all financial professionals and, specifically, to independent insurance professionals. It is also essential producers know under this regulation they will be compared to other professionals with similar authority and licensure. In talking with several members of the working group, it was confirmed this is certainly the intent of the rule, borne out by some of the working group deliberations, but there is also recognition that explicit language could help remove uncertainty.

3 Misconceptions about Best Interest

As the National Association of Insurance Commissioners considers amending the model suitability regulation, and as the U.S. Securities and Exchange Commission considers adoption of a parallel best interest proposal, the FACC Campaign finds certain misconceptions have taken root that must be addressed to ensure the ongoing debate is conducted based on facts and sound reasoning rather than preconceived notions or inaccurate assumptions. Kim O’Brien helped kill the DOL fiduciary rule. Here’s what she thinks about the new sales standards projects.

FACC Campaign Welcomes 5th Circuit Mandate – Encourages NAIC to Step Back from Best Interest

The Fifth Circuit saw through the fallacy of the Labor Department’s presumption that it could simply deem insurance agents and securities brokers (who are sellers of products) to be equivalent to investment advisers.  The decision blasted the Labor Department for ignoring the longstanding distinction between an agent and adviser, only the latter of which is a fiduciary based on a unique position of trust and confidence, for whom standards of prudence and loyalty apply under ERISA.   

In rendering its decision, the Court rejected the paternalism of the DOL, rejected the agency’s arbitrary exercise of power, and rejected the idea that regulators could just turn anybody into a fiduciary.  Now that the Fifth Circuit has spoken, one wonders whether the financial services industry, along with regulators, will heed this message or simply chalk off the decision as a narrow admonishment aimed at the Labor Department.   That would be greatly disappointing and a missed opportunity to redirect regulatory energies in a way that truly helps consumers. 

FACC to NAIC: Suitability Works

A fiduciary/best interest duty simply does not fit insurance which first and foremost is a product, not a service, and which notably is a guaranteed insurance product backed by an insurance company. Taking concepts like best interest and fiduciary duty, or whatever it is ultimately called, which never were intended to apply to the sales of insurance products and now applying them based on some ill-defined desire for a uniform standard is not warranted.

Rather than invasive surgery on a working regulation, the NAIC should consider a swifter and perhaps more effective solution to any remaining gaps is through improved disclosure.

Great Scott! Or should we say Great Scottrade!

While the Scottrade case and these various pronouncements generally are directed at the securities industry, not fixed annuities, the implications are deeply worrisome.  The Fixed Annuity Consumer Choice (FACC) Campaign is concerned these developments prove the U.S. Department of Labor is losing control over the rule and unleashing uncontrolled forces such as hyper-aggressive state regulators and the always profit-hungry plaintiff’s bar that may wreak havoc on the financial services industry.   

Contact:

Dwight Carter FSA

dwight@fsa4life.com

919-210-7364

Fixed Annuity Choice – Steering Committee

info@fixedannuitychoice.com

Eric Marhoun – F&G Life

eric.mahoun@fglife.com

612-859-1695

Paul Garofoli – National Western Life

pgarofoli@nationalwesternlife.com

Kim O’Brien – AAP

kim@aapnow.com

414-332-9312

Andrew Unkefer – Unkefer & Associates

andy@unkefermail.com

800-523-5851