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Jul 12 2017

Rep. Wagner Introduces Bill to Replace DOL Fiduciary Rule With Best Interest Standard

A congressional subcommittee is holding a hearing on Thursday to review the impact of the Department of Labor’s fiduciary rule on the capital markets and to discuss legislation introduced by Representative Ann Wagner (R-MO) that would repeal the rule and create best interest standards of conduct for brokers.

The Subcommittee on Capital Markets, Securities, and Investment will hold the hearing on Thursday, July 13 at 10:00 a.m. to gather evidence on the unintended consequences of the fiduciary rule, and to discuss the Securities and Exchange Commission acting as the lead agency on the best-interest standard issue moving forward.

According to a memo sent to Financial Services Committee members, the hearing will include testimony from David Knoch, president of 1st Global; Mark Halloran, senior director and head of industry and regulatory strategy at Transamerica; Jerome Lombard, president of the Private Client Group at Janney Montgomery Scott; Cristina Firvida, director of Financial Security and Consumer Affairs at AARP; and Douglas Holtz-Eakin, president of American Action Forum.



“The subcommittee will review the impact of the fiduciary rule on the capital markets and the ability of financial advisers, including broker-dealers, to continue providing affordable and reliable retirement investment advice to their customers,” the memo said.

Portions of the rule went into effect on June 9th while full implementation is slated for January 1, 2018.

The memo noted that the subcommittee will analyze “the reasons why the SEC is better equipped to update the standard of care for broker-dealers than the DOL.”

The hearing will also examine a legislative proposal by Rep. Wagner that would require broker-dealers to act in the retail customers’ best interest when providing recommendations. The bill seeks to impose enhanced disclosure obligations on broker-dealers and gives the SEC rulemaking authority on the content of the disclosures.

The fiduciary rule, which currently under review as directed by President Trump, seeks to eliminate conflicts of interest in the marketplace for retirement investment advice.

The DOL recently issued a request for information seeking additional comment on whether to further extend the transitional period beyond January 1, 2018, and whether the fiduciary rule’s revised exemption structure should be modified.

The SEC also issued a request for public comment on standards of conduct for investment advisers and broker-dealers that provide investment advice to retail investors. SEC chairman Jay Clayton recently agreed to work with the DOL on the fiduciary rule issue.

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Article by: The DI Wire


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