Compliance Corner: DOL Fiduciary Rule Update and Industry News

by FIG Marketing

Some of us have seen the stories and read the news regarding the DOL’s fiduciary rule and the Fifth Circuit Court of Appeals decision to vacate the rule.

This result was certainly a welcome surprise for our industry, but there are things you should know about this ruling: First and foremost, the rule still exists! The ball is currently in the DOL’s court and they can decide to appeal this ruling, or to back away and accept it.

If the DOL appeals, we’ll have to wait for the next court’s decision. If the DOL decides not to press forward legally, the ruling should stand.

At this time, you’re still required to complete the appropriate disclosures prior to the sale. While the DOL has said it will not enforce the rule at this time, we should look to see what states like Massachusetts are doing to ensure enforcement.

Massachusetts has accused Scottrade of violating the rule, which could start a trend in various states pushing their own agendas. Ultimately, most believe this entire topic has always belonged in the SEC’s wheelhouse.

In fact, the SEC is quickly working on their own version of a fiduciary rule. Some news outlets have reported that the SEC should have a draft version of their rule at some point this summer – or maybe sooner. We’ll keep you up-to-date on any further developments.

In other news, our carrier partners often provide us with various news articles from around the industry on a variety of topics. I’ve written about sales practice issues involving seniors (age 65+) in a previous Compliance Corner post. But, below are more stories you can read that’ll show you the seriousness state insurance commissioners have with regards to elder financial abuse.

  1. The Oklahoma Insurance Department is now offering free seminars to teach seniors about the latest scams that are being used by certain “bad actors”:
    Insurance Department Hosting Free Seminars to Warn Seniors About Latest Scams
  1. A Wisconsin court is requiring an insurance agent to give up $1million received after being named a beneficiary of an elderly client’s policies.
    Insurance Agent Should Give up $1 Million Received from Client’s Policies, Judge Recommends
  1. In California, an insurance agent was denied parole for his acts in elder abuse.
    No Parole for Former Embezzling Insurance Agent
  1. Also in California, an insurance agent finds himself in jail for the next 9 years for defrauding seniors.
    Insurance Fraud of $1.4 Million Lands Agent in Prison for 9 Years

When working with senior investors, you should take great care to ensure recommendations are well-documented. It’s good practice to have family members of elderly customers attend meetings (this too should be documented).

As our country’s population ages, these stories will likely increase and give our industry a black eye. Always do the right thing and you can never go wrong!

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