Life License Qualification Program (LLQP) Practice Exam

What corrective action might the Department of Financial Services order an agent to take after an improper sale of an annuity?

1. Sell a more appropriate annuity

2. Provide a written apology letter

3. Pay monetary restitution to the client

4. Pay a penalty of three times the client's loss

The correct answer is: Pay monetary restitution to the client

The Department of Financial Services typically focuses on ensuring that consumers are protected and that agents adhere to regulatory standards. When an improper sale of an annuity has occurred, a common corrective action would involve the agent being ordered to pay monetary restitution to the client. This action addresses the financial impact on the client, aiming to restore them to the position they would have been in had the improper sale not occurred. Restitution signifies a commitment to remediate the situation, acknowledging the loss incurred by the client due to the agent's actions. Providing restitution is often viewed as a foundational step in reestablishing trust and accountability in the financial services industry. Other corrective measures, such as selling a more appropriate annuity, may not directly compensate the client or address their specific financial loss, while a written apology letter would not have the same restorative financial impact. Imposing a penalty of three times the client's loss could be an option but is more severe than typically mandated for an improper sale, focusing instead on punitive action rather than restitution to the victim.