SDLRC - Codified Law 58-33A-25 - Compliance with comparable standards by financial professional.

58-33A-25. Compliance with comparable standards by financial professional.

Recommendations and sales of annuities made in compliance with comparable standards shall satisfy the requirements of §§ 58-33A-13 to 58-33-27, inclusive. This section applies to all recommendations and sales of annuities made by financial professionals in compliance with business rules, controls, and procedures that satisfy a comparable standard even if such standard would not otherwise apply to the product or recommendation at issue. For this section to apply, an insurer shall:

(1) Monitor the relevant conduct of the financial professional seeking to rely on this section or the entity responsible for supervising the financial professional, such as the financial professional’s broker-dealer or an investment adviser registered under federal or state securities laws using information collected in the normal course of an insurer's business; and

(2) Provide to the entity responsible for supervising the financial professional seeking to rely on this section, such as the financial professional’s broker-dealer or investment adviser registered under federal or state securities laws, information and reports that are reasonably appropriate to assist the entity to maintain its supervision system.

Nothing in this section shall limit the director’s ability to investigate and enforce the provisions of §§ 58-33A-13 to 58-33A-27, inclusive, or limit the insurer’s obligation to comply with § 58-33A-20(4), although the insurer may base its analysis on information received from either the financial professional or the entity supervising the financial professional.

Source: SL 2008, ch 273, § 13; SL 2012, ch 250, § 10; SL 2022, ch 186, § 24, eff. Jan. 1, 2023.

58-33A-25.1. Insurance producer to have adequate knowledge of annuity product--Required training.

No producer may solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer's standards for product training. A producer may rely on insurer-provided product-specific training standards and materials to comply with this section. A producer who engages in the sale of annuity products shall complete a one-time four credit training course approved by the director and provided by a director-approved education provider.

A producer who obtains a life insurance line of authority may not engage in the sale of annuities unless the annuity training course required under this section has been completed. The minimum length of the training required under this section shall be sufficient to qualify for at least four continuing education credits, but may be longer. The training required under this section must include information on the following subjects:

(1) The types of annuities and various classifications of annuities;

(2) Identification of the parties to an annuity;

(3) How product-specific annuity contract features affect consumers;

(4) The application of income taxation of qualified and nonqualified annuities;

(5) The primary uses of annuities; and

(6) Appropriate standard of conduct, sales practices, replacement, and disclosure requirements.

An insurance producer who has completed an annuity training course approved by the division prior to January 1, 2023 shall, within six months, complete either a new four credit training course approved by the division or an additional one-time one credit training course approved by the division and provided by the division-approved education provider on appropriate sales practices, replacement, and disclosure requirements under §§ 58-33A-13 to 58-33A-27, inclusive.

Source: SL 2012, ch 250, § 11; SL 2022, ch 186, § 25, eff. Jan. 1, 2023.

58-33A-25.2. Annuity training course providers--Training requirements of other states.

Each course provider intending to comply with § 58-33A-25.1 shall cover all subjects listed in § 58-33A-25.1. No provider of such course may present any marketing information or provide training on sales techniques or provide specific information about a particular insurer's products. Additional subjects may be offered in conjunction with and in addition to the required subjects. Each provider of an annuity training course intending to comply with § 58-33A-25.1 shall register as a continuing education provider in this state and shall comply with the rules applicable to producer continuing education courses as set forth in chapter 58-30.

An annuity training course may be conducted and completed by classroom or self-study methods. Each provider of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with chapter 58-30. The satisfaction of the training requirements of another state that are substantially similar to the provisions of this section satisfy the training requirements of this section and § 58-33A-25.1. The satisfaction of the components of the training requirements of any course or courses with components substantially similar to § 58-33A-25.1 are be deemed to satisfy the training requirements.

Source: SL 2012, ch 250, § 12; SL 2022, ch 186, § 26, eff. Jan. 1, 2023.

58-33A-25.3. Insurer to verify producer has completed annuity training course.

An insurer shall verify that a producer has completed the annuity training course required pursuant to § 58-33A-25.1 before allowing the producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this section by obtaining certificates of completion of the training course or obtaining reports provided by a director-sponsored database system or vendor or from a reasonably reliable commercial database vendor that has a reporting arrangement with an approved insurance education provider.

Source: SL 2012, ch 250, § 13; SL 2022, ch 186, § 27, eff. Jan. 1, 2023.

58-33A-25.4. Authorized insurance business--Other licenses.

Nothing in §§ 58-33A-13 to 58-33A-27, inclusive, should be construed to require a producer to obtain any license other than a producer license with the appropriate line of authority to sell, solicit, or negotiate insurance in this state, including a securities license, in order to fulfill the duties and obligations contained in §§ 58-33A-13 to 58-33A-27, inclusive provided the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses.

Source: SL 2022, ch 186, § 16, eff. Jan. 1, 2023.

58-33A-25.5. Definition of terms--Compliance with Conduct Rules.

The terms used in § 58-33A-25 mean:

(1) "Comparable standards,":

(a) With respect to broker-dealers and registered representatives of broker-dealers, applicable SEC and FINRA rules pertaining to best interest obligations and supervision of annuity recommendations and sales, including 17 C.F.R. § 240.15|-1 (2023);

(b) With respect to investment advisers registered under federal or state securities laws or investment adviser representatives, the fiduciary duties and all other requirements imposed on such investment advisers or investment adviser representatives by contract or under the Investment Advisers Act of 1940 or applicable state securities law, including the Form ADV and interpretations; and

(c) With respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions, and all other requirements attendant to such status under Employee Retirement Income Security Act of 1974 (ERISA) or the Internal Revenue Code as of January 1, 2023; and

(2) "Financial professional," a producer that is regulated and acting as:

(a) A broker-dealer registered under federal or state securities laws or a registered representative of a broker-dealer;

(b) An investment adviser registered under federal or state securities laws or an investment adviser representative associated with the federal or state registered investment adviser; or

Source: SL 2022, ch 186, § 23, eff. Jan. 1, 2023.