The bill also strengthens fines against agents who target Floridians using fraudulent annuities sales practices. Additionally, the legislation made it a third degree felony to submit a fraudulent signature and prohibits agents from using fake designations to falsely imply financial expertise, according to a press release from Florida’s CFO Alex Sink.
“This legislation represents a good first step,” Sink said. “We were able to increase protections for seniors and punish agents who commit financially devastating crimes. That said, I will continue to push for it to be a felony to intentionally deceive a senior into an inappropriate annuity product. And I’m not going to rest until we’re able to put unscrupulous agents that prey on our seniors behind bars.”
According to the release, highlights of amendments to F.S. 627.4554—Annuity Investments by Seniors are:
- Agents licensed in Florida must take a minimum of three hours of continuing education about the subject of suitability in annuity and life insurance transactions.
- Any person who willfully submits fraudulent signatures on an application or policy-related document commits a felony of the third degree.
- Any agent who misuses a designation to imply they have specialized training or knowledge or misrepresents their actual qualifications, commits a violation of the unfair trade practices.
- The law significantly expands the type of information the agent is required to collect from the senior consumer to determine suitability when recommending an annuity.
- The law requires the agent to complete a detailed form comparing the benefits of the senior consumer’s existing annuity to the one being recommended by the agent as a replacement.
- The law increases the period in which the consumer can obtain an unconditional refund if the consumer decides not to accept the life or annuity policy from 10 to 14 days from the date the policy is received.
- The law imposes fine maximums of $30,000 for each willful violation of “twisting, churning and submission’ of fraudulent signatures.
Sink, who oversees the state’s department of Financial Services, created the Safeguard our Seniors (SOS) Task Force to develop solutions to better protect Florida seniors from falling victim to financial fraud. More information is available at www.flseniors.net.
The recent legislation in Florida mirrors a regulatory trend nationwide to protect seniors from investment fraud. Both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have spoken out about the issue in the last year (see “FINRA Offers Education on Early Retirement Scams’ and “Regulators to Share Best Practices in Working with Senior Investors’). Last summer, the U.S. Senate introduced a bill to protect senior investors from investment fraud (see “Bill Aims To Protect Senior Investors’).
Annuities are a specific point of concern for regulators, because the increasingly complex products are not governed by the same rules as other investments, which is why the SEC proposed extending securities rules to some annuities in order to protect senior investors (see “SEC Proposes Rule to Protect Senior Investors’). FINRA’s Rule 2821 also increased suitability requirements for the purchase or exchange of deferred variable annuities (see “As Good as Annuity’).