Trade groups representing life insurance agents are asking Senator Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, to reconsider Section 913 of his bill, Restoring American Financial Stability Act, which would force life insurance agents to register as investment advisors.
In a November 20 letter to Dodd, the Association of Advanced Life Underwriting (AALU), the National Association of Insurance and Financial Advisors (NAIFA), and the National Association of Independent Life Brokerage Agencies (NAILBA), argue the impact of Section 913 of the bill would be “enormously costly and counterproductive,” and “is a radical departure from current law.” It would lead to “reduced customer access and service, reduced financial protection for Americans, and loss of capital formation and jobs,” the groups argue.
Section 913, the groups say, “would force life insurance agents who already are qualified as registered representatives and supervised by the SEC and FINRA to register as investment advisers–and thereby take on more responsibilities, more expenses, and more liability.” Section 913, if enacted, the groups go on to say, “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.”
Dodd and his committee began marking up the Restoring American Financial Stability Act on November 19, but Dodd halted work on the bill after opposition from ranking minority member Richard Shelby (R-Alabama). Bipartisan talks are resuming on the bill, and Dodd hopes to have the bill completed by year-end.
Politico reported November 24 that Dodd has asked key members of his committee to break off into bipartisan working groups to “break the logjam” on the financial reform legislation. Politico says that Dodd will pair up with Shelby to tackle two of the most controversial elements of the bill’s discussion draft–prudential regulation of banks and consumer protection.
The House Financial Services Committee’s Investor Protection Act (H.R. 3817), which was passed on November 4 and sent to the full House floor for debate in early December, also includes similar fiduciary duty language. However, the bill includes an amendment by Rep. Dan Maffei (D-New York) which clarifies that broker/dealers and their reps “would not have to be knowledgeable of all products in the universe,” Maffei said.