As the comment period on the SEC's proposal to regulate indexed annuities as securities under the Securities Act of 1933 came to a close on September 10, the Financial Planning Association (FPA) told the SEC it supports federal regulation of indexed annuities.
Such regulation would go a long way in curbing the litany of abuses against seniors that are associated with sales of indexed annuities, the FPA said. Dan Barry, FPA's director of government relations, says he thinks it's highly likely that the proposed rule will be approved, even though there'll be a lot of kicking and screaming from the insurance industry. When such an approval will come is uncertain, however. It remains to be seen if SEC Chairman Christopher Cox will push the rule through before his departure from the Commission in a few months, and the regulator is also still breaking in three new commissioners. The SEC plans to hold its Senior Summit in Washington September 22.
The rule is good in that "it recognizes that indexed annuities have both insurance and securities characteristics, and proposes a system of dual insurance/securities oversight," Barry told the SEC in the FPA's comment letter. He says the proposed rule is also a "significant step forward in ensuring that the people selling annuities fully understand the product they are recommending, and that consumers are making an informed choice."
