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.

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.

Both letters argue that a more responsible approach, as articulated by the American College, is to substitute language in the legislation for Sec. 913 mandating a “full SEC report.”

This report, the College’s letter said, should “deliver required rulemaking and clear legislative recommendations, as necessary, along with a detailed picture of the consequences of various courses of action.”

The American College letter was signed by Laurence Barton, president and CEO.

“Your approach in Sec. 913 of eliminating the exclusion for brokers and dealers from the Investment Advisers Act of 1940 may seem simple, but by adopting it, you fall into the same trap that the House Financial Services Committee narrowly averted,” the letter said.

“It’s one thing to harmonize standards at a fiduciary level when brokers, dealers and investment advisers are providing the identical service of offering advice for a fee about securities,” the letter said.

The difficulty is that brokers, dealers, and investment advisors, while having some overlap in services, are not the same, the letter said.

The letter cautioned that the provision, if enacted, could impact distribution systems and consumer access for certain products, such as variable life insurance; could impose additional expenses on providers, “ultimately resulting in added costs passed on to lower and middle-market consumers;” and could decrease “significantly” the number of financial advisors.

The letter from the three life insurance agent trade groups makes similar points.

It asks members of the Senate Banking Committee to reconsider what the groups fear will be the “enormously costly and counterproductive impact” of a bill that would impose a fiduciary standard on sale of investment products by agents.

They also call the proposed legislation “a radical departure from current law.”

The insurance agents’ 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 advisors–and “thereby take on more responsibilities, more expenses, and more liability.”

The provision, if enacted “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 advisors.”