WASHINGTON BUREAU — A Treasury Department official says the Obama administration will push for including a broad fiduciary standard provision in the final financial services bill.

Treasury Undersecretary Neal Wolin talked about the bill, H.R. 4173, the Wall Street Consumer Reform and Consumer Protection Act, today during a speech in Baltimore, at a conference organized by the Financial Industry Regulatory Authority, Washington.

The Obama administration will fight any attempt to weaken the bill when talks to reconcile differing House and Senate versions of the legislation get under way June 15, Wolin said.

“We will continue to fight for the strongest financial reform bill possible,” he said. “And we will oppose any attempts by particular interests to use the conference process as an opportunity to weaken the final bill….We believe that retail brokers offering investment advice should be subject to the same fiduciary standard of care as investment advisors, and we will work to include that provision in the final bill. Clients receiving investment advice don’t distinguish between broker-dealers and investment advisors and neither should the law.”

The Securities and Exchange Commission now requires investment advisors to use a fiduciary standard of care when selling financial products to customers. The fiduciary standard means the advisors are supposed to put customers’ interests ahead of their own.

Broker-dealers and life insurance distributors affiliated with broker-dealers come under a suitability standard, meaning that they must verify that the products they sell customers suit the needs of those customers.

The House has included a standard-of-care provision similar to the version supported by the Obama administration in its version of H.R. 4173. The House bill would provide two safe harbors for insurance agents and investment advisers. One says an investment advisor or agent would not violate the standard just because the advisor or agent received a commission for selling a product. The other safe harbor in the House bill says an agent or advisor would not violate the standard simply by acting as a captive agent and selling a limited range of products.

The Senate version of H.R. 4173, supported by many life insurers and life producers, calls for the SEC to study the issue and report back to Congress.

The Senate earlier this week appointed 12 members to a conference committee that will iron out the differences between the Senate and House versions of H.R. 4173.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said Monday in a memo that he wants the House to act on a reconciled bill June 29. That schedule would give the Senate 3 days to act before Congress is set to leave for its Independence Day break July 2.

THE VIEW FROM NAIFA

Thomas Currey, president of the National Association of Insurance and Financial Advisors, Falls Church, Va., says the House bill fiduciary standard provision and the Obama administration version are ambiguous.

NAIFA will continue to support the Senate’s version of the provision, Currey says.

An SEC study of the standard-of-care issue “would result in a fact-based approach to address real problems rather than by adopting a ‘one-size fits all’ amorphous fiduciary standard–the need for which is unsupported by any factual findings,” Currey says.

“NAIFA believes the best way to protect consumers from bad actors is through strong and effective supervision within financial services firms, and regular, periodic inspections by the SEC and other regulatory bodies,” Currey says.