Around the PIA Western Alliance States – Week of March 24, 2025

Oregon — All entities offering health benefit plans in Oregon: The Oregon Division of Financial Regulation has issued a bulletin regarding the director’s expectations for health benefit plans under the Oregon Reproductive Health Equity Act.

Purpose

This bulletin sets forth the director’s expectations for health benefit plans under the Oregon Reproductive Health Equity Act (RHEA). It clarifies the requirements for providing reproductive health services without cost sharing and guides carriers in ensuring consistent and equitable access to care.

Scope of RHEA covered services generally 

In cases in which a service described in ORS 743A.067(2) is also a federal preventive service, the director considers RHEA to be inclusive of, but not limited to, the coverage that is required under federal law. Accordingly, if a health benefit plan fails to provide coverage for a federal preventive service that is also described under ORS 743A.067(2), the director would consider that plan to have violated both RHEA and the federal preventive services mandate. At the same time, however, a health benefit plan’s obligation to comply with RHEA is not limited to solely providing federal preventive services without cost sharing in accordance with 42 USC § 300gg–13 and ORS 743A.262.

Click here to review this bulletin: https://bit.ly/41Zc0qy

Oregon — Unlicensed third-party digital platforms and held away accounts: The Oregon Division of Financial Regulation (DFR) is aware that some Oregon state-licensed investment advisers are using the services of unlicensed/unregistered third-party digital platforms to actively manage, trade, and bill on assets in held away accounts.

DFR is concerned that adviser use of these platforms may violate the Oregon Securities Law, Oregon Revised Statutes (ORS) 59.005 to 59.451, 59.991 and 59.995, and Oregon Administrative Rules (OAR) chapter 441.

The purpose of this investment adviser alert is to communicate the bases of DFR’s concerns and to reiterate aspects of compliance for advisers to consider in using these platforms.

Data privacy, cybersecurity, and improper use of clients’ credentials

At least one unlicensed/unregistered third-party platform being used by some advisers to access held away accounts uses a client’s username and password to access held away accounts. It appears that the platform does so without the knowledge or consent of the custodians responsible for safeguarding the held away assets. Impersonating clients in this manner may void client account protections with the custodian and may interfere with or disrupt the custodian’s AML (anti-money laundering) and BSA (Bank Secrecy Act) compliance and surveillance systems.

This platform collects a significant amount of private client data (including the client’s age, investment time horizon, risk tolerance, net worth, and investment preferences and strategies) to provide its services. As an unlicensed/unregistered entity, there is no financial regulator reviewing the platform’s policies, procedures, or practices for compliance with federal and state data privacy, cybersecurity, or safeguarding laws.

A state investment adviser and its investment adviser representatives are fiduciaries and have a duty to act primarily for the benefit of the adviser’s clients (OAR 441-205-0145(1)). In Oregon, it may be a deceptive practice, a breach of fiduciary duty, and, accordingly, a dishonest or unethical business practice under OAR 441-205-0145(1-2), for an adviser to use a client’s personal login credentials. An investment adviser may be breaching its fiduciary duty when it accesses a client's account by using the client’s own unique identifying information, such as username and password.

Also, it is a an unethical business practice for a state investment adviser, or an investment adviser representative for a state investment adviser, to engage in conduct or any act, indirectly or through or by any other person, which would be unlawful for such person to do directly under the provisions of OAR 441-205-0145 or the Oregon Securities Law (OAR 441-205-0145(1)(o)).

Inadvertent custody

DFR understands that at least one unlicensed/unregistered third-party platform has marketed its service as allowing advisers to manage held away accounts without custody. Please note that marketing statements are not determinative of whether custody in fact exists.

Advisers should independently review and understand their ability and authorization to access client funds. Such a review should examine the powers of attorney, agreements between the client and the third-party platform, and any agreements between the client and the custodian of each held away account that is accessed by or through the third-party platform.

Advisers should ensure that none of the agreements confer upon the adviser or the third-party platform the authority to access or withdraw client funds or securities from a held away account.

In addition, it appears that at least one third-party platform might add the investment adviser or investment adviser representative as a supplemental or authorized user on the client’s custodial account to navigate account authentication procedures during login. In that circumstance, it would be important to know what rights the supplemental or authorized users are given by each custodian, most notably whether supplemental or authorized users have the ability (whether used or not) to withdraw funds or securities from the account.

Investment advisers with custody of client assets must affirmatively disclose this and are subject to heightened safeguarding requirements (OAR 441-175-0165(5)(a), OAR 441-175-0100(4), OAR 441-195-0040(2), OAR 441-195-0050, and OAR 441-205-0180).

Fees

At least one unlicensed/unregistered third-party platform that some investment advisers are using to access held away accounts is charging the adviser a fee, believed to be between 25 to 30 bases points, based on the value of the assets in the held away accounts. Some investment advisers are charging their clients a fee for managing these held away assets, ranging from simply passing the platform fees on to clients to charging the full advisory fee that they apply to other managed assets.

In Oregon, investment advisers are prohibited from charging an unreasonable advisory fee (OAR 441-205-0145(1)(j)). It is a an unethical business practice for a state investment adviser or any of its investment adviser representatives to charge a client an unreasonable advisory fee (OAR 441-205-0145(1)(j)).

DFR questions whether it is reasonable for an investment adviser to charge an assets under management (AUM) fee for “managing” a held-away account where the adviser has no authority or control over the securities that are available in the plan and where the account is automatically rebalanced, including for accounts traditionally meant to hold long-term assets.

Advisers should consider the adverse impact that an annual AUM fee has in eroding returns on held away assets to ensure the advisers, as fiduciaries, are acting in the best interests of their clients.

Compliance by third-party platform

DFR is reviewing the services that third-party platforms provide, and their compliance with the Oregon Securities Law. DFR urges state-licensed investment advisers, when engaging the services of third-party platforms, to conduct and adequately document their own due diligence and confirm their own compliance with the aforementioned rules.

You can view or update your subscriptions, password or e-mail address at any time on your User Profile Page. All you will need are your e-mail address and your password (if you selected one).

This service is provided to you at no charge by Oregon Department of Consumer and Business Services. Visit us on the web at http://www.oregon.gov/DCBS/.

Washington — Commissioner Kuderer testifies on restitution bill: Washington state Insurance Commissioner Patty Kuderer made her case for Senate Bill 5331 on Wednesday, stressing the importance of restitution payments for people financially harmed by an insurance company or agent.

“As the consumer watchdog, people expect us to help them when they’ve been harmed by a company they’ve trusted,” Kuderer said during testimony before the House Consumer Protection & Business Committee. “They expect us to be able to make them whole.”

The bill, requested by Kuderer and prime sponsored by Senator Adrian Cortes (D - Battle Ground), grants the Insurance Commissioner the authority to require a company or person violating insurance laws to pay restitution.

Kuderer cited the 120 complaints her office received about Seguro Medico, a sham health insurance company with a history of selling fake plans, drafting fees out of victims’ bank accounts without permission and demanding thousands of dollars for new policies after their victims learned their initial plans were useless.

Despite defrauding victims out of an estimated $777,000, the only action Kuderer’s office was legally able to take against the company was a $100,000 fine and suspension of its agents’ licenses.

SB 5331 would change that and would apply in all types of insurance situations. Currently:

    When an insurance company uses rates that haven’t been approved by the Insurance Commissioner, there is no mechanism to order repayment to policyholders who have overpaid.

    If an unauthorized insurer, like an illegal health insurer, defrauds policyholders, the Insurance Commissioner can fine the company but cannot order them to repay the money they took.

    If an insurance agent collects premiums but doesn’t forward that money to the insurance company — leaving the policyholder without coverage — the Insurance Commissioner can’t require them to repay the money they took.

The Insurance Commissioner’s authority to fine property and casualty insurers — which include home and auto insurance companies — is limited to $10,000, regardless of the number of violations. For health insurers, the limit is $10,000 per violation or offense; SB 5331 would align the two, allowing for per-violation fines of up to $10,000 for property and casualty insurance companies.

Washington is an outlier in how it fines property and casualty insurance companies for law violations, Kuderer said, noting that 37 states issue fines on a per-violation basis.

“Fines help incentivize the insurer or individual to come back into compliance and helps deter them from harming consumers in the future,” she added.