How to stay on the good side of regulators
Scamming seniors or committing fraud is sure to arouse regulatory scrutiny. But far more advisors get into hot water by failing to properly manage their state licenses. To help advisors avoid problems, the Maine Department of Insurance offers the following tips.
Take care when submitting your license filings. This means reading questions thoroughly and providing relevant and correct answers. Although it may be embarrassing to admit a prior conviction or consent agreement, failing to do so may lead to disciplinary action or license loss. In general, being totally upfront is the best policy.
Keep your license information current. If a material event occurs, notify your regulator as soon as possible. Again, failure to disclose such events may lead to disciplinary action.
Keep your address up to date. Making sure your regulatory authority knows where to reach you is crucially important. This will assure that you continue to receive updates on new regulations and continuing education due dates. If you fail to notify a regulator when you move, you may commit an infraction simply through ignorance.
Keep accurate records. Regulatory bodies typically require advisors to retain records for a certain number of years after a completed transaction. The records must include at least the following information: name of insurer, name and address of insured, policy number, premium payable, expiration date of policy, and date and time of all binders. The information must be made available to the Superintendent upon request.
Understand the applicable laws. Become intimately familiar with state regulations, especially those relating to advertising, misrepresentation and rebating. Also, get familiar with the laws and regulations relating to the products you sell. For example, rules relating to annuity suitability are quite explicit. Ignorance of these standards will not buy you leniency in the event of an infraction.
Tap the knowledge of your regulators as needed. If you have questions about a specific law or licensing procedure, don’t hesitate to call your state regulatory office or to refer to its website. Also visit the site periodically (or sign up for RSS updates if available) in order to receive the latest bulletins.
Source: National Ethics Association, www.ethics.net.