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Fiduciary/Best Interest Development
- On February 27, 2020, the Iowa Insurance Division proposed a best interest standard for annuity producers and securities sales representatives to act in the best interest of their customers in recommending an annuity.
- In finalizing the rule, the Division indicated that, in response to comments, it was postponing the securities portion of the standard but proceeding with the insurance portion of the rule without change from the proposal. The Division indicated that it “anticipates publishing a new Notice of Intended Action related to the securities portion of the rulemaking this summer”, though no proposal has been published as of July 10, 2020.
- The final rule, which is similar to the NAIC model suitability standard (discussed below) and is intended to be consistent with the SEC’s Regulation Best Interest, will require financial professionals to “always put the consumer’s interest first” and to only make recommendations that match the customer’s needs, objectives and personal situation.
- The final rule specifically provides that it is not intended to give consumers a private right of action to enforce the new standard or to create a fiduciary relationship between a producer and a consumer.
- The insurance portion of the rule will become effective January 1, 2021.