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Understand Today's Environment

Multiple Best Interest rules or standards have been proposed or passed into law recently by the Securities and Exchange Commission (SEC), National Association of Insurance Commissioners (NAIC), and some individual states. These fiduciary standards with varied jurisdictions are likely to bring significant change and complexities to consumers, financial professionals, and the industry. We provide information to help you understand these developments and their implications.

Best Interest/Fiduciary

NY Regulation 187

With the DOL Fiduciary Rule vacated by the 5th circuit court of appeals in 2018, the industry's intense fiduciary focus has shifted to state regulators. Of particular impact to the life and annuity industry is the New York Department of Financial Services (DFS) amendment to Regulation 187, renamed, “Suitability and Best Interests in Life Insurance and Annuity Transactions” regulation.

Other State Initiatives

With the DOL Fiduciary rule having been vacated by the 5th circuit court of appeals in 2018, the intense focus across the industry on the federal fiduciary rule has now shifted to state regulators threatening a Potpourri of legislation across the states. The states of New York, Nevada and Connecticut have already passed Best interest laws. Others, including New Jersey, Massachusetts, and Illinois have proposed new legislation.

SEC Best Interest

ON June 5th 2019, the Securities and Exchange Commission adopted a new rule establishing a standard of conduct for broker-dealers when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities (“Regulation Best Interest”). Regulation Best Interest enhances the broker-dealer standard of conduct beyond existing suitability obligations, and aligns the standard of conduct with retail customers’ reasonable expectations.

NAIC Annuity Suitability

The Suitability in Annuity Transactions Model Regulation require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in transactions involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed.

Workplace Retirement Initiatives

DOL Rules on ARPs

The U.S. Department of Labor (DOL) has released a final ruling, to be effective September 30, regarding association retirement plans (ARPs). This will allow small businesses to join together to provide their employees defined benefit retirement plans. (More)

DOL Issues Final PTE for Auto Portability

July 31st the U.S. Department of Labor (DOL) released the final Prohibited Transaction Exemption (PTE) to Retirement Clearinghouse (RCH) for the RCH Auto Portability program, completing the regulatory framework required for its adoption. (More)

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