Earlier this week we posted this video and story summary on The Settlement Channel, explaining the news regarding this exceptionally large FINRA fine levied against Met Life. Excerpts of the Settlement Channel story follow:
"Met Life has agreed to pay a penalty of $25 million to the Financial Industry Regulatory Authority (FINRA) to settle FINRA’s investigation into MetLife’s sales of variable annuities to tens of thousands of investors. The sum includes a fine of $20 million plus $5 million to customers “for making negligent material misrepresentations and omissions” in the sale of replacement variable annuities to MetLife customers. This is the second largest fine ever assessed by FINRA."
" FINRA charged that MeLife’s salespeople failed to help its customers properly compare old and new versions of the annuities, leading some people to change to a newer version of the annuity that was more expensive and less customer generous than the older version. Each sale of a new product typically includes a commission of 5% to 7%, something that encourages sales of newer annuities. MetLife sold at least $3 billion worth of variable annuities through replacements between 2009 and 2014. Insurers began to change their variable annuity contracts after the stock market decline in 2008 revealed the financial risks they faced in offering extremely generous benefits to investors. "
The implications in all this for structured settlement experts is not so much the black eye given to yet another one of the premier life insurance brands that also happen to write structured settlements. Instead it is the continued focus by regulators, the press, industry groups and others on the sales practices, communication, commission structure and business model of annuity sales in general. Those of us in the structured settlement profession can expect to see continued scrutiny of the settlement process and sales practices of our profession, as regulators, industry groups and others examine the suitability of structured settlements as part of the over all settlement plan for injury victims through out the US.