Groups Oppose Fiduciary Mandate

Based on Shelby’s comments, Dodd said he will take members of the committee “at their word” in seeking to work together on a bipartisan legislation. He said he was “wedded to nothing” in his discussion draft and would lift his deadline to have work on the bill completed by the end of this year.

The provisions the 3 trade groups protested about grew out of a proposal by the Obama administration to give the Securities and Exchange Commission discretionary rulemaking authority to harmonize the obligations of investment advisors and brokers and dealers to their customers.

The House Financial Services Committee Nov. 4 voted, 48-17, to submit its version of the legislation to the House floor. A House vote is expected in early December.

The agents’ trade groups, while winning some concessions in the language of the bill, especially the limitations on a proposed safe harbor for insurance agents, still have concerns about the House bill.

The bill is H.R. 3817, the Investor Protection Act.

In their letter to members of the Senate Banking Committee, the trade groups said Sec. 913 of the Dodd bill would force life insurance agents who already are qualified as registered representatives and supervised by the SEC and the Financial Industry Regulatory Authority to register as investment advisers–and “thereby take on more responsibilities, more expenses and more liability.”

The provision “would force thousands of our members to limit the product choices available to their customers, the majority of whom are middle-market consumers who look to us for insurance and retirement products,” the letter said.

The letter argues that Sec. 913 “would force virtually all broker-dealers, including life insurance agents who qualify as registered representatives of broker-dealers for purposes of offering variable and other investment products, to register as investment advisers.”

The letter argues that the language is a “radical departure from current law and has never been the subject of committee hearings or significant analysis of its cost or impact on a host of financial services industries, product choices for consumers or the broader economy.”