Most insurance would be exempt from oversight by the proposed Consumer Financial Protection Agency under legislation the Treasury Department sent to Congress last week.
However, investment advisors currently regulated only by state securities regulators would be subject to CFPA regulation, according to industry officials.
The bill would exempt people engaged in the “business of insurance” from the proposed agency’s authority, except for credit, mortgage and title insurance.
The bill also says that the CFPA would oversee “financial advisers” who provide “financial and other related advisory services,” officials at the National Association of Insurance and Financial Advisers and the Association for Advanced Life Underwriting say.
“It is not clear what this term covers and how it differs from ‘investment advisers,’ and therefore NAIFA will be seeking clarity on that term,” says a NAIFA spokesman.
The bill specifically states the CFPA would not have authority over persons regulated by the SEC–thus exempting broker-dealer registered representatives, NAIFA says. It also specifically excludes from coverage investment advisors subject to oversight by the SEC, the group says.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, wants to move legislation creating the agency through his unit by the end of July.
Legislative action on other parts of the Obama administration’s plan for reforming regulation of the financial services industry will be delayed until fall, Frank said.
The bill as submitted to Congress is different than that initially envisioned by the administration. Originally, top officials had said the bill would cover annuities. However, after intense lobbying by the industry, the administration backed off.
No Insurance In Consumer Agency Bill