Life insurance agents are stepping up their efforts to push down the road legislative action on proposals that would harmonize the suitability standards investment advisors and broker-dealers have to meet in regard to their customers.
In a recent letter to members of the Senate Banking Committee, officials of the three major trade groups representing life insurance agents asked that language calling for a single standard be replaced by a requirement that the Securities and Exchange Commission conduct a detailed study of the issue.
And, in the last development, a group that provides continuing education to investment professionals, including insurance agents, is supporting the agents’ request.
The letters were written to members of the Senate Banking Committee about Sec. 913 of the “Restoring American Financial Stability Act of 2009,” legislation drafted by Sen. Chris Dodd, D-Conn., chairman of the committee, for committee consideration.
What Your Peers Are Reading
Dodd has reopened talks about his omnibus bill in hopes of drafting a bipartisan version for committee action before Congress leaves for the Christmas recess.
The provision that concerns the industry and which the American College talks about in its letter would give the SEC discretionary rulemaking authority to harmonize the standard of care investment advisors and brokers and dealers must provide to their customers when selling investment products.
The provision in the Senate bill is similar to language contained in H.R. 3817, the Investor Protection Act.
Agents’ trade groups, while winning some concessions in the language of the IPA, especially the limitations on a proposed safe harbor for insurance agents, still have concerns about the House bill.
The bill was reported to the House floor Nov. 4 and a floor vote is expected in early December.
The American College, Bryn Mawr, Pa., said in a Nov. 30 letter to members of the Senate Banking Committee, that “a ‘one-size-fits-all’ approach has the potential to damage consumer choice and access while not enhancing consumer protections at all-an unintended outcome that could echo some of the legislative disasters the United Kingdom has enacted in financial services over the past few decades.”
The American College provides continuing education to investment professionals, including insurance agents. Its
services are used by more than a third of all financial advisors practicing in the U. S., the letter said.
It is consistent with a letter sent several weeks earlier to key members of the Senate committee by officials of the Association for Advanced Life Underwriting; the National Association of Insurance and Financial Advisors; and the National Association of Independent Life Brokerage Agencies.