FINRA seeks to delay some of VA sales rule

The Financial Industry Regulatory Authority Inc. has proposed to delay the principal-review portion of Rule 2821, a rule that governs the review of deferred variable annuity sales. The New York and Washington-based regulator yesterday announced that it will file with the Securities and Exchange Commission to push back the effective date for principal review and supervisory/compliance procedures for 180 days after Finra files a rule change. As part of Section C of the rule, principals at Finra member firms would review the suitability of the annuity applications within seven business days of the customer’s signing the application, prior to sending the application to the insurance carrier. However, firms argued that this wouldn’t be enough time for a thorough review, and requested that Finra consider a different timing mechanism. Other firms wondered how the rule would apply to broker-dealers who don’t make investment recommendations and who therefore don’t have principals to check suitability. Last fall, this portion of the rule was pushed back to Aug. 4 to allow firms extra time to prepare. Section D, governing supervisory and compliance procedures, also has been delayed. Sections A, B and E, which focus on training registered reps and adhering to suitability standards, are still scheduled to go into effect May 5.