WASHINGTON BUREAU — Producer groups are hoping they still have time to keep Sen. Christopher Dodd from calling for financial services broker-dealers to conform to the same standard of care that applies to investment advisors.
Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, apparently will wait until next week to unveil his new financial services reform legislation.
Dodd is waiting because Sen. Richard Shelby, R-Ala., the highest-ranking Republican on the committee, has rejoined talks aimed at crafting a bipartisan financial services reform package.
Dodd has already been working on a package with Sen. Robert Corker, R-Tenn. Earlier, Dodd had said he would release that package this week, and that a markup of the legislation would take place during the first week of March.
One controversial section of a draft that Dodd released in December 2009 would create a universal fiduciary standard for the sale of investment products to customers.
Life insurance agents, who often have broker-dealer arrangements that limit them to selling the products of one company, or several companies, have worried that they have no practical way of meeting a fiduciary standard.
Today, the law requires only that broker-dealers verify that a product sold to a consumer appears to suit the needs of that consumer.
Sen. Timothy Johnson, D-S.D., has circulated a draft amendment that would respond to agents’ concerns by replacing the universal fiduciary standard provision with a provision requiring the U.S. Securities and Exchange Commission to conduct a detailed study of the issue before implementing a new standard.
The SEC could draft new rules only if it could show that the new rules were needed to address “regulatory gaps and overlaps in existing rules that the study identified.