Controversy swirls over index annuity rule

The Financial Planning Association and the National Association for Fixed Annuities have leapt into the fray, and made public their opinions about the SEC’s proposed index annuity rule. The opinions were released one day after the Securities and Exchange Commission ended the comment period on whether it should regulate index annuities as securities, thus placing the product under its supervision, as well as that of the Financial Industry and Regulatory Authority Inc. of New York and Washington, and requiring that those who sell the product become securities-licensed. The Denver-based FPA praised the proposed rule, pointing to past complaints of misleading sales of the product to senior citizens at free luncheons. “We are very pleased that the SEC has moved forward to help protect the retirement assets of the vulnerable senior population,” said Dan Barry, the FPA’s director of government relations, in a statement. “Indexed annuities have been marketed as a risk-free investment, but they’re not for everyone.” On the other hand, Milwaukee-based NAFA panned the SEC for ultimately closing its comment period yesterday, despite congressional protests to keep it open for further consideration. Those congressional supporters included Rep. Ron Paul, R-Texas, the former presidential contender. “By not allowing a reasonable comment period, the commission apparently discounted the reasoned views of numerous members of Congress, small-businesspersons and state regulatory officials who requested an extension,” Malott Nyhart, NAFA’s chairman, noted in a statement. The extension would have permitted cost benefit analyses and assessed whether the rule promoted efficiency and competition.