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October 20, 2009 at 08:00 PM
WASHINGTON BUREAU — The House Financial Services Committee will wait until Oct. 27 to mark up a group of financial regulatory system reform bills.
The bills involved are H.R. 2609, the Federal Insurance Office Act of 2009; H.R. 3817, the Investor Protection Act; H.R. 3818, the Private Fund Investment Advisers Registration Act of 2009; and the Accountability and Transparency in Rating Agencies Act draft.
Committee leaders postponed the “markup,” or revising, of the bills at the request of Republicans committee members.
Agent groups have been especially concerned about provisions in the IPA bill that would try to “harmonize” treatment of broker-dealers and investment advisors that are collecting fees, by requiring both to meet a fiduciary standard when selling products to consumers, meaning that they would both have to act “solely” in the interest . Traditionally, broker-dealers and their sales representatives have simply had to verify that the products sold to consumers are suitable for those consumers.
The House Financial Services Committee has tried to address the concerns of agent groups about the broker-dealer fiduciary standard in the IPA bill by developing a “manager’s amendment” stating “that investment advice subject to a fiduciary duty is provided on a personalized basis.”
The draft amendment would expand a provision governing commission-based sales to include other standardized compensation systems, according to the committee staff.
“The SEC is further authorized to facilitate the disclosure of any material conflicts of BDs and IAs in their disclosures to retail customers,” according to an amendment draft summary obtained by National Underwriter. “The SEC would further have the authority not only to prohibit but also restrict certain practices, conflicts and compensation schemes.”
Additionally, the manager’s amendment would ensure “that the standard of conduct for all BDs and IAs providing personalized investment advice will be at least as high as the current standard prevailing today for IAs,” according to the draft amendment summary.
