WASHINGTON BUREAU — The House Financial Services Committee has agreed to an amendment that could ease the effects of a “standard of care” provision on producers who sell a limited menu of investment products.

The amendment, which was offered by Rep. Dan Maffei, D-N.Y., and passed by a voice vote, says, ”The sale of only proprietary or other limited range of products by a broker or dealer shall not, in and of itself, be considered a violation” of the fiduciary standard that will govern sales of securities products by the Securities and Exchange Commission going forward.”

The amendment affects a manager’s amendment to the fiduciary care provisions in H.R. 3817, the Investor Protection Act of 2009 bill, and is designed to clarify that the effort to “harmonize” the standards of care owed to consumers during the sales process will not prohibit the sale of insurance products with a securities component offered by a single broker-dealer and its representatives. These products include variable life insurance and annuities.

A fiduciary standard requires sellers of investment products to act solely in what they believe to be the best interests of the client. Traditionally, insurance agents have had to meet a suitability standard, which has required only that they verify that the product sold to a consumer appears to be suitable for that consumer.

H.R. 3817 as a whole is supposed to make the standards that apply to sales people who sell investment products to consumers more uniform.

Rep. Barney Frank, D-Mass., said the Maffei amendment was one of 30 proposed H.R. 3817 amendments that the panel was considering. He said it was likely that work on the bill, part of a package of financial regulation bills based on Obama administration proposals, would continue until Nov. 3.

Both the National Association of Insurance and Financial Advisors, Falls Church, Va., and the Association for Advanced Life Underwriting, Falls Church, have supported the Maffei amendment.

“The approval of the Maffei amendment–clarifying that offering a proprietary or limited basket of products, like receipt of commission, does not, in and of itself, constitute a violation of a broker-dealer’s fiduciary duty–is a positive development,” Chris Morton, an AALU vice president, says.

But Morton lashed out at the core objective of H.R. 3817 — applying a fiduciary standard to commissioned-based sales professionals.

“The vast majority of Americans cannot afford or choose not to use fee-based advisors to represent them on an exclusive basis and we are very concerned that the result of a harmonized fiduciary standard would be to limit access to, and choice of, more affordable and accessible commission-based financial professionals,” Morton says. “We do not see how agents and others who make their living through sales commissions can have a fiduciary duty to parties on both sides of the same transaction–to both customers to whom they sell and product manufacturers for whom they work.”

NAIFA President Tom Currey says NAIFA supports the Maffei amendment “because it would provide clarity about a fundamental truth in the marketplace — broker-dealers and their registered representatives only offer products that the company or companies with which they are affiliated and/or with which they have a contractual relationship/agreement make available.”

Currey says NAIFA also supports a new disclosure requirement proposed in the manager’s amendment, which would establish guidelines a registered representative could use when describing the scope of products the rep could offer to a client.