Iowa Insurance
Division's plan is based on model regulation approved earlier this year.
Iowa has proposed a
best-interest standard requiring financial professionals to act in the best
interest of clients.
The plan, released by the Iowa Insurance
Division, is based on the model regulation approved by the National Association
of Insurance Commissioners earlier this year and requires annuity agents and
broker-dealers and their reps to act in the best interest of their customers.
The Iowa Insurance Division is a member of the
NAIC and North American Securities Administrators Association.
The Insurance Retirement Institute (IRI) said
Tuesday that while it supports the Iowa regulation, the annuity group is
concerned about “potential inconsistencies” between the Securities and Exchange
Commission’s Regulation Best Interest and Iowa’s proposed best interest
standard for securities professionals.
Jason Berkowitz, IRI chief legal and
regulatory affairs officer, said Iowa’s proposal aims to align with Reg BI,
“but IRI and our members are concerned about a few subtle but important
distinctions between the two.”
George Michael Gerstein, partner at Stradley
Ronon in Washington, agreed that the Iowa proposal “seeks to proximately
harmonize with Regulation Best Interest.”
In comments filed with the Iowa Insurance
Division, IRI stated that the inconsistencies between federal rules and Iowa’s
proposal could be addressed by a clear exception or safe harbor for federally
regulated broker-dealers and registered reps acting in compliance with Reg BI,
which has a June 30 compliance date.
“In our view, this would be the most clear and
direct way to avoid duplication and inconsistency,” Berkowitz said.
Broker-dealers and registered reps would also
not have sufficient time to appropriately comply with the new rules, IRI said,
as its requirements and conditions “are complex and would require significant
information technology re-design and build outs to support.”
IRI asked that the plan be revised to provide
“sufficient time for firms and financial professionals to develop and implement
the policies, procedures, and systems changes necessary to achieve compliance.”
Also, due to the ongoing challenges related
the COVID-19 pandemic, IRI urged the Iowa agency to extend the comment period
and postpone the public hearing for 90 days.
A public hearing is currently scheduled for
April 28.
Melanie Waddell is Washington Bureau Chief,
Investment Advisory Group. She also covers regulatory and compliance issues.
Her column, The Playing Field, appears in Investment Advisor and
on ThinkAdvisor.com, and she also writes the briefing and produces the podcast,
Human Capital. Earlier in her career, Melanie covered financial issues at
American Banker/Thomson Media publications in Washington and New York. You can
reach her at mwaddell@alm.com. On twitter: @Think_MelanieW
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