WASHINGTON–Insurance agents would be required, probably within 18 months, to meet a fiduciary standard in selling investment products under a deal worked out in Congres today.
Under a compromise provision that will be part of financial services reform legislation that was approved by House and Senate negotiators today, the Securities and Exchange Commission must report back to Congress within six months on its findings of gaps in existing regulation.
After that, the agency would be allowed to launch rulemaking designed to impose a fiduciary standard on the sale of all investment products.
Knut Rostad, chairman of the Committee for the Fiduciary Standard, called the compromise language a “huge victory for investors.”
He said the Securities and Exchange Commission will now have the authority to extend the fiduciary standard to brokers rendering investment advice.
Under the provision, the SEC has six months to complete the study, down from two years as called for under Sec. 913 of the Senate bill, “which is extremely appropriate,” he said. “The fiduciary standard is on a fast track to all investment professionals rendering advice.”
Tom Currey, president of the National Association of Insurance and Financial Advisors, disagreed. “We are disappointed with the decision to allow the SEC to put in place a ‘best interest’ standard that will not tie directly to findings from the study,” he said.
However, NAIFA supports the House efforts to ensure that the “best interest” standard recognizes that no broker-dealer and their registered representatives can violate the standard simply because they receive commissions and sell proprietary products, Currey said.
The final deal was drafted by House negotiators Thursday and approved by Senate negotiators after a brief meeting.