Reactions to passage of the landmark re-write of financial services reform that the Senate passed Thursday, July 15, were swift. The Financial Planning Coalition released a statement saying the legislation laid the foundation for vital consumer protection in two key areas: the fiduciary standard of care and the regulation of financial planners.
The final version of the financial reform legislation approved by the Senate and awaiting President Obama’s signature, gives the SEC rulemaking authority, after a six-month study of advisor and broker/dealer obligations, to extend the fiduciary standard of care to brokers who give retail investment advice to individuals. The bill also requires a study by the Government Accountability Office (GAO) on the need for regulation of the financial planning profession. Currently, the Coalition states in its release, “there is no oversight of the profession; anyone can call himself or herself a financial planner without meeting any competency or ethical standards. The Financial Planning Coalition found in a January study that 83% of American consumers support the regulation of financial planners.”
“Straightforward, commonsense regulations for the financial planning profession are needed to help consumers identify qualified and ethical financial advisors,” said Bob Glovsky, 2010 Chair of the Board of Directors for the Certified Financial Planner Board of Standards, Inc., said in the Coalition release. “Current laws do not offer enough protection for consumers from abuse by financial advisors. The Financial Planning Coalition has found this to be the case in our own studies; we are pleased that the GAO is undertaking its own study and we expect that it will echo our findings.”
U.S. Treasury Secretary Timothy Geithner released a statement on July 15 in which he said that the passage of the reform bill by the Senate “is the beginning, not the end, of the process of financial reform.” As soon as the President Obama signs this bill into law, he said, “We will move forward to design and implement these new protections and to consolidate responsibility and authority.” These reforms, Geithner continued, “place an enormous burden of responsibility on the shoulders of those who lead our financial regulatory agencies. They recognize that responsibility.”