WASHINGTON BUREAU — Providers of retirement products could be exempt from oversight by the proposed Consumer Financial Protection Agency.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, earlier this week suggested proposal revisions that would keep retirement services providers out of CFPA jurisdiction.
Officials at the National Association of Insurance and Financial Advisors, Falls Church, Va., are welcoming the revisions, but they say the devil is in the details.
The proposed legislation still contains provisions that could lead to CFPA regulation of all credit-related products, including those provided by insurance companies and agents, NAIFA President Tom Currey says.
“How the next iteration of the CFPA language deals with credit-related insurance products in the actual legislative proposal is of concern to NAIFA,” Currey says. “The initial Financial Services Committee draft language took a very broad approach to credit-related products including insurance that could, essentially, eliminate the ‘credit-related’ limitation on the powers of the new agency. We shall see.”
Frank talked about the CFPA retirement products exemption at financial services regulatory reform hearing.
Frank also has broached the topic in a CFPA memo circulated to interested parties, and he expects to convene a Financial Services Committee hearing on the CFPA at 10 a.m. Sept. 30. http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_092309.shtml
The Frank memo states that providers of individual retirement accounts, 401(k) retirement plans, 529 college savings plans and defined benefit pension plans would be exempted from CFPA oversight.
Frank also intends to exclude securities, commodities, and investment and insurance products from CFPA jurisdiction, but not “financial planners,” according to the memo.
Treasury Secretary Timothy Geithner said at the hearing that the Obama administration would support the changes Frank has proposed in an effort to get regulatory reform legislation through the House as quickly as possible.
Life insurance agents and companies are a significant source of retirement plans, Curry said.
The move to exclude retirement products from CFPA jurisdiction “appears to offer some positive movement on the retirement products and regulation-of-advisors issues,” Curry says.
But NAIFA wants to know more about how the term “financial planners” will be defined,” Curry says.
Jack Dolan, a spokesman for the American Council of Life Insurers, Washington, says the Frank decision, supported by the Obama administration, “is not surprising.”
“Our retirement products already are regulated at the federal and state levels,” Dolan says.
The ACLI is glad to see the administration and lawmakers reflecting “wisely on the wisdom of avoiding redundant regulation that does nothing to improve consumer protections,” Dolan says.