093_HB3102

 
                                     LRB093 08716 JLS 08946 b

 1        AN ACT concerning financial transactions.

 2        Be  it  enacted  by  the People of the State of Illinois,
 3    represented in the General Assembly:

 4        Section 1. Short title. This Act  may  be  cited  as  the
 5    Financial Transaction Review Act.

 6        Section 5. Right to review by an attorney.
 7        (a)  In  all  transactions  involving  contracts for life
 8    insurance of all kinds and investment products including, but
 9    not limited to, variable or fixed  annuities,  mutual  funds,
10    IRAs,  401(K)s,  securities, or assets under management, with
11    annual or initial premiums or payments in excess  of  $2,500,
12    the  consumer  must  be  advised in writing of his right to a
13    review of the proposed transaction by  an  Illinois  licensed
14    attorney.
15        (b)  A  properly  licensed financial service provider, or
16    any Illinois licensed attorney who is  properly  licensed  in
17    insurance  or  securities, who provides insurance, annuities,
18    securities, or other related financial services  or  products
19    to  a  consumer may pay all or part of the cost of the review
20    of the transaction  along  with  the  cost  of  any  document
21    preparation or estate planning legal services (or may provide
22    those  legal  services  free  of  charge  if he is a licensed
23    attorney) related to the transaction for a consumer  who  has
24    purchased  a financial product, provided that if the attorney
25    is an employee of the  financial  service  provider,  he  has
26    disclosed  his potential conflict of interest to the consumer
27    and the consumer has agreed to waive any  potential  conflict
28    of  interest  as  it  relates  to  the  transaction or if the
29    attorney is a financial service provider  acting  in  a  dual
30    capacity,  he  has  disclosed  his  dual  licensing  and  his
31    potential  conflict  of  interest  to  the  consumer  and the
 
                            -2-      LRB093 08716 JLS 08946 b
 1    consumer has  agreed  to  waive  any  potential  conflict  of
 2    interest as it relates to the transaction and to the attorney
 3    acting in a dual capacity.
 4        (c)  When  an  attorney  is  acting in a dual capacity as
 5    financial  service  provider  and  attorney  for  review  and
 6    related legal services, or if  the  attorney  performing  the
 7    review  is an employee of the financial service provider, the
 8    consumer must be advised  in  writing  of  his  right  to  an
 9    attorney  review  of  the proposed transaction by an attorney
10    who is not the financial  service  provider,  or  is  not  an
11    employee  of  the financial service provider, as the case may
12    be.

13        Section 10. Scope of review. A consumer's attorney review
14    is not intended to be  repetitive  or  competitive  with  the
15    financial service provider and shall not consider issues such
16    as  cost  or  quality  of insurance or investment choice. The
17    attorney's review shall be limited in scope and focus to  the
18    following considerations:
19             (1)  whether  the  client's risk profile is accurate
20        and consistent with the client's estate planning needs;
21             (2)  whether the insurance  or  investment  plan  is
22        affordable  to  the  client  based  on present income and
23        expense needs;
24             (3)  whether the proposed ownership and  beneficiary
25        designation   is  consistent  with  current  estate  plan
26        intentions and whether all assets have  been  transferred
27        and titled properly;
28             (4)  whether  the  client's  current  estate plan is
29        adequate to accommodate the recommendations proposed, and
30        whether there are any necessary legal documents that must
31        be prepared  to  properly  perfect  the  client's  estate
32        planning objectives; and
33             (5)  any  other  legal  concerns  that  the attorney
 
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 1        deems necessary to address.

 2        Section 15. Statement of objections.
 3        (a)  If  an  attorney  has  objections  to  the  proposed
 4    financial service transaction, he shall state them in writing
 5    and forward his objections to the financial service provider.
 6    The financial service provider shall then  consult  with  the
 7    consumer.  The  consumer  may  accept  the  financial service
 8    product against the advice of the attorney, or the  financial
 9    service  provider  may  present  a  revised  proposal for the
10    attorney's review.
11        (b)  Upon  presentation  for  review  from  a   financial
12    service  provider,  the  attorney  shall  be  prohibited from
13    making a referral  to  another  competing  financial  service
14    provider,  and  in  no event shall the attorney, upon review,
15    offer specific insurance or investment  alternatives  to  the
16    consumer,  whether  or not the attorney is licensed to do so,
17    unless he was the original attorney acting in a dual capacity
18    with consent  from  the  consumer  and  independent  attorney
19    review was waived in writing.

20        Section  20.  Right of rescission. If the consumer is not
21    advised of or allowed to exercise his  right  to  independent
22    attorney  review,  the  consumer  may rescind the transaction
23    without penalty of any kind for any reason at any time within
24    one year after the consummation of the transaction.

25        Section 25. Payment  for  review.  If  the  cost  of  the
26    attorney  review and related legal services are paid for from
27    commissions earned by the financial  service  provider,  they
28    must  be  paid  directly  to  the attorney. The amount of the
29    payment must be a reasonable and customary fee for such legal
30    services, and payment for legal services provided must not be
31    dependent upon a positive review. If no sale is  made  or  no
 
                            -4-      LRB093 08716 JLS 08946 b
 1    commissions  are  earned, the cost of the attorney's services
 2    may not be passed on to the consumer unless the consumer  has
 3    agreed  in  writing  in advance of the transaction to pay the
 4    attorney's fees directly  in  the  event  that  the  consumer
 5    chooses not to consummate the financial transaction.

 6        Section 30. No obligation upon financial service provider
 7    to  pay  for review. Nothing in this Act requires a financial
 8    service provider to pay the cost of an attorney's  review  or
 9    other  legal  services  related  to  the  proposed  financial
10    transaction,  and  nothing  in  this  Act shall be implied to
11    require an attorney review of a financial transaction if  the
12    consumer  has been advised of his right to an attorney review
13    and he has chosen to waive it.

14        Section 35. Administration by Department of Insurance.
15        (a)  This Act shall be administered by the Department  of
16    Insurance.  The  Department may promulgate rules necessary to
17    enforce the provisions of this Act.
18        (b)  The rules promulgated under  this  Act  may  include
19    forms for the proper disclosure of any potential conflicts of
20    interest.