CFP Board Calls on NAIC to Develop New Model Regulation for Annuities that Offers Real Consumer Protections

Recently, CFP Board submitted a comment letter to the National Association of Insurance Commissioners' (NAIC) Annuity Suitability Working Group on the implementation of the Suitability in Annuity Transactions Model Regulation (#275).

CFP Board published a comparison guide evaluating the Model Regulation against its own Code of Ethics and Standards of Conduct, available here. As set forth in the guide, the Model Regulation is fundamentally flawed and does not provide a sound or effective model for regulating annuity recommendations. The Model Regulation does not require an insurance producer to act as a fiduciary and it excludes cash and non-cash compensation from the scope of material conflicts of interest. As a result, while the Model Regulation requires disclosure of how the producer is compensated, there is no requirement to identify and reasonably manage material conflicts of interest arising from fixed annuity sales compensation, even though cash and non-cash compensation are among the most prevalent and significant conflicts of interest.

CFP Board urges NAIC to pause and begin anew by developing a new model regulation from the ground up that provides genuine consumer protections.

To read the full letter to the NAIC, please click here.