FINRA Coming to Insurers for Information

In a recent speech to the IRI Government, Legal and Regulatory Conference, Richard G. Ketchum Chairman and CEO of FINRA indicated that, in an effort to make it easier for broker/dealers to respond to requests for information, FINRA has “launched a pilot program to collect data directly from the product underwriters and manufacturers using a standard request and template. The program focuses on products most frequently sold by retail firms.” Ketchum further indicated that the first tranche of requests was sent to insurers in April and that most responses were timely. A second round is scheduled shortly. Carriers are being invited to contribute feedback on the process and influence how similar requests are handled in the future.

This is part of the “overall goal to combine broader data collection with more sophisticated analysis as part of our enhanced exam program. The objective is simple; We want to become more effective in spotting trends, and in creating risk-based exams that go beyond the sampling approaches we have traditionally used while over the long term reducing costs and effort for the industry to obtain and use the information.”

Mr. Ketchum reports that while there were suitability problems found, FINRA is “pleased with the industry’s response to the variable annuity rule requirements.”

The direct and ongoing requests for information from FINRA to insurers directly seems to be another indication that the march toward federal regulation continues.

On another note, it was noted that FINRA expects to issue a Notice to provide further guidance on social media later this year. Issues of supervision over the use of smart phones and tablets, such as the iPad, seem to be one key area that will be addressed.