Senators Interested in Legislation to Address Senior Investment Fraud

On September 5 the Senate Special Committee on Aging (Chairman Herb Kohl, D-WI) held a hearing entitled "Advising Seniors About Their Money: Who is Qualified and Who is Not?" The hearing investigated major media allegations that some financial advisors are using questionable professional designations to gain access to elderly Americans and encourage them to purchase unsuitable financial products. Most commonly, these questionable purchases involve deferred annuities. Designations receiving the most scrutiny by the committee were those that imply a level of expertise in the financial affairs of senior citizens. The lead witness at the hearing, Chairman Christopher Cox of the Securities and Exchange Commission, spoke about the growing problem of senior investment fraud and promoted the SEC's 2nd Annual Senior Summit that was held on September 10.

The major outcome of the hearing is that Chairman Kohl announced his plans to "develop legislation that will provide a uniform standard for the accreditation of senior financial advisors that state regulators would be encouraged to adopt." In addition, Chairman Chris Dodd (D-CT) of the Senate Banking Committee (which has jurisdiction over insurance issues) is planning to hold a hearing on the subject as early as this fall. According to Chairman Dodd's staff, he also will develop federal legislation to address the problem.

NAIFA strongly opposes inappropriate sales of insurance and annuity products and believes that persons who are proven to have engaged in these practices should be subject to appropriate penalties under the law. NAIFA supports the adoption in the states of the NAIC's Suitability in Annuity Transactions Model Regulation and Annuity Disclosure Model Regulation. In addition, we support comprehensive and easy-to-understand disclosure of all of the pertinent facts about annuities and other insurance and financial products.

NAIFA Response: The NAIFA Policy Formation Committee has met and is working to develop a plan to address the allegations put forth by the media and the government.

Resources:

1. September 5 Senate Aging Committee Hearing Summary
2. NAIFA Statement to the Aging Committee
3. Former NAIFA CEO David Woods' response to The New York Times
4. Former NAIFA President John Davidson's response to The Washington Post

Back to October 1, 2007, NAIFA Frontline