Providers of retirement products will be exempt from oversight by the proposed Consumer Financial Protection Agency (CFPA) under a revision to the bill offered by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
But officials of the National Association of Insurance and Financial Advisors said that while they welcomed the decision, which “pares back” the legislation, they cautioned that the devil is in the details.
Tom Currey, president of NAIFA, also voiced concern that the proposed legislation still contains provisions that would regulate all credit-related products, including those provided by insurers and agents.
“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 said.
“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,” Currey said.
Frank proposed the changes at a hearing on financial regulatory reform at which Treasury Secretary Timothy Geithner testified and in a memo he circulated to interested parties.
At the hearing, Geithner said the administration would support the changes in the bill proposed by Frank as a means of moving the legislation through the House as quickly as possible.
Specifically, the Frank memo states that providers of IRAs, 401(k) plans, 529 plans and pension plans will be exempted from the oversight of the CFPA.
“Life insurance companies and agents are a significant source of these types of retirement plans,” NAIFA’s Currey said.
NAIFA sees excluding them from the CFPA’s purview as appearing to offer some positive movement on the retirement products and regulation of adviser issues, he added.
Jack Dolan, a spokesman for the American Council of Life Insurers, said the Frank decision, supported by the Obama administration, “is not surprising.”
He added, “Our retirement products already are regulated at the federal and state levels,” and noted that “the bill reflects wisely on the wisdom of avoiding redundant regulation that does nothing to improve consumer protections.”