The Securities and Exchange Commission is making clear that it will move promptly to extend the fiduciary standard to all professionals who sell investment products–a critical issue for insurance agents who sell a limited range of products and the broker-dealers they work for.

The provision is Sec. 913 of H.R. 4137, the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The provision mandates that the agency complete within six months of passage of the legislation a study on the fiduciary standard issue.

The provision in the law dealing with the issue then gives the agency the clear power to draft a new standard-of-care rule based on the findings of the report.

At the same time, in public comments, agency chairman Mary Schapiro made clear she will not allow the notice-and-comment process to be used to water down the intent of the financial services reform law.

The SEC would follow the new law “to the letter” when writing its rules, she said at a forum sponsored by the Chamber of Commerce. “The regulatory process is not designed to re-debate issues that Congress has resolved,” she said.

And, she again voiced support for a uniform fiduciary standard “no less stringent” than the standard applicable to investment advisers, and said an investment adviser must “put the interest of their clients before their own.”

An insurance industry lawyer who asked that his name not to be used cautioned that Ms. Schapiro’s comments and actions aimed at a transparent rulemaking process are not as important as the substance.

“At the end of the day, what agents and brokers should be looking for are commissioner and staff signals on what the fiduciary standard regulation will look like,” the lawyer said.

“How it deals with compensation for agents and brokers, disclosure rules, marketing restrictions, conflict of interest and trading policies are key, not the process,” the lawyer said. “Those mandates are what agents and brokers are going to have to live with down the road.”

The SEC will have a 30-day comment period on 14 questions regarding evaluating, “the effectiveness of existing legal or regulatory standards of care.” Under the extended process, all comments submitted to the new Web site will be posted for public viewing.

In addition, when industry or consumer groups meet with members of the commission’s staff to discuss rule proposals, the meeting’s agenda will be publicly released. The commission will also conduct public hearings on selected topics.

A spokesman for the National Association of Insurance and Financial Advisers said it is studying the notice, and examining NAIFA’s options regarding comment to the SEC.

The Committee for the Fiduciary Standard, which supports a single standard of care for professionals selling investment products, lauded Ms. Schapiro for again stating her commitment for a single standard.

But, Knut Rostad, chairman of the committee, said the group is concerned that the relatively short 30-day public comment period for the study might be misinterpreted by retail investors as the only opportunity to express their opinions on standards of care, and have the effect of discouraging retail investor participation. “We believe this point should be clarified, and the opportunity for providing additional comment, in the event of rule-making after the study, made clear,” Rostad said.

Barbara Roper, director of investor protection for the Consumer Federation of America, said in response to Ms. Schapiro’s pledge of transparency that the agency “deserves high marks for actively seeking public input as they fashion their rule proposals, rather than waiting until after the rule proposals have been finalized to seek that comment.”

“Members of the investing public can’t begin to match the resources and expertise that the industry can bring to bear, but the SEC has gone out of its way to invite public participation and to eliminate, as much as possible, the barriers that might otherwise prevent participation by members of the public.”

Ms. Roper added that even the relatively simple step of centralizing the comment requests on these issues and organizing them by category “makes the process more user-friendly.”

Also, she said, “we are pleased that the agency is doing so much to ensure as much transparency as possible in that consultative process.”