Rep. Ann Wagner, R-Mo., said Thursday that she plans to introduce her bill to repeal the Department of Labor’s fiduciary rule by the end of September.
Wagner, who chairs the House Financial Services Committee’s Oversight and Investigations Subcommittee, floated the draft bill, which also keeps a fiduciary rulemaking under the Securities and Exchange Commission’s jurisdiction, in mid-July.
“I’ll be introducing legislation that we’ve been working on for months, with all stakeholders, that does indeed establish a best-interest standard for broker-dealers,” Wagner said during an event held at the U.S. Chamber of Commerce in Washington.
In her prepared remarks, the representative said her bill would be introduced before SEC Chairman Jay Clayton testifies before the House Financial Services Committee in early October.
“I believe we have a willing partner at the SEC, who gets it,” said Wagner, citing previous comments from Clayton that he would be “extremely disappointed” if there’s “a substantial reduction in choice for the retail investors” as a result of Labor's fiduciary rule.
“I’ve had many interactions with [Chairman] Clayton, and I look forward to him coming before our committee,” she explained.
After introducing the bill by the end of September, Wagner said she'd then be "moving it to markup" soon thereafter.
As to her as yet unnamed bill, Wagner said that it repeals Labor’s fiduciary rule “period. Full stop. And it gets the Department of Labor out of the broker-dealer space.”
The bill also proposes “a best-interest standard for all broker-dealers and their entire portfolio of investment vehicles — investment and retirement. A best-interest standard for all broker-dealers that Congress sets,” she said.
That standard, she continued, would require recommendations made to retail customers that “reflect reasonable diligence,” as well as reflect “the reasonable care, skill and prudence that broker-dealers would exercise based on a customer’s investment profile.”
The types of compensation the advisor receives would also have to be disclosed under the bill and advisors would be required to “clarify any conflict of interest that may exist,” Wagner said.
Her legislation, she added, would state that the SEC and the Financial Industry Regulatory Authority “would become the rightful regulators and enforcers of this [best-interest] standard.”
Wagner said she’s “reaching across the aisle” to gather support for her bill.
At Thursday's Chamber event, Rep. Phil Roe, R-Tenn., who introduced legislation to kill the fiduciary rule — the Affordable Retirement Advice for Savers Act (H.R. 2823), which passed the House Committee on Education and the Workforce by a 22-17 vote in late July — said he and Wagner “are working together” to stop the fiduciary rule.
Roe’s bill would require advisors to serve their clients’ best interests and institutes disclosure requirements.
Responding to a question about whether Congress would move away from dealing with any legislative solution to the fiduciary rule now that Labor is seeking comment on an 18-month delay of the rule’s Jan. 1 compliance date (to July 1, 2019), Roe said congressional action on fiduciary “will get pushed down. There’s just so much on the plate right now,” such as tax reform, hurricanes, the debt ceiling and healthcare issues.
In separate comments shared with ThinkAdvisor after his official remarks, Roe reiterated his view that fiduciary legislation would not receive priority on the Hill, stating that “Congress works on deadlines.” However, he added, “I’ll keep after this [fiduciary issue]; it’s not something I’m going to take my eye off of.”