It’s not every day the Consumer Federation of America aligns its lobbying interests with the annuities industry, but the powerful group made an exception when it sent a letter to lawmakers asking them to pass legislation allowing companies to streamline their registration and create more meaningful disclosures for index-linked annuities products.

The bipartisan “Registration for Index-Linked Annuities Act” was reintroduced in the House of Representatives in July and directs the Securities and Exchange Commission to come up with a new form for insurers and annuities companies when they are filing to create registered index-linked annuities (also called RILAs).

The sales of these products have grown rapidly in recent years: $9.2 billion in sales were reported in this year’s first quarter.

They are relatively new entrants in the retirement market. Registered index-linked annuities use a stock market index to determine gains and losses while providing tax deferral. What sets them apart from other annuities is that they allow investors to set the maximum loss they are willing to tolerate.

However, because there is no specific form for registering these products with the SEC, that means the disclosures can be “long, dense and incomprehensible to the typical purchaser,” said Dylan Bruce, the Consumer Federation of America’s financial services counsel, in a letter to bill sponsors and House leaders, including House Banking Committee Chairwoman Maxine Waters (D., Calif.).

Because this legislation “offers a model for how disclosures can and should be designed with the needs of investors in mind, CFA is pleased to offer it our strong support,” Bruce said.

By directing the SEC to develop a tailored registration form for the product, the bill “should help to ensure that disclosures are more focused on the information investors need to determine whether the product represents a good option for them,” Bruce wrote.

Bruce said his organization is particularly pleased the legislation would require that disclosures be made based on “the knowledge and sophistication of purchasers and the complexity of the product. Furthermore, the bill requires the SEC to engage in investor testing and incorporate results of that testing in the design of the form, with the goal of ensuring that key information is conveyed in terms that purchasers are able to understand,” he added.

The Insured Retirement Institute, which represents the annuities industry, announced its support for the measure in August.

“We appreciate CFA’s support of this important pro-investor, pro-innovation legislation,” said Paul Richman, the institute’s chief government and political affairs officer, in a statement.

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