WASHINGTON BUREAU — The Consumer Federation of America (CFA) says opponents of a uniform fiduciary standard have provided no evidence that a uniform standard would increase the cost of investment services.

Barbara Roper, director of investor protection at the CFA, Washington, is urging members of the House Financial Services Committee to let the U.S. Securities and Exchange Commission (SEC) proceed with making a rule that would apply a fiduciary standard on brokers as well as financial advisors.

“The SEC has proposed a way to move forward on fiduciary duty that maximizes investor Dodd-Frank compassprotections while minimizing industry disruption,” Roper says in a letter sent to members of the committee.

The SEC “has won broad support from industry and investor advocates alike,” Roper says. “It would be tragic if opposition from a few industry members intent on maintaining the status quo were able to derail that progress. Despite the self-interested claims of certain industry members, it is the middle income investors who must make every dollar count who are most in need of these enhanced protections.”

A provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to study the standard-of-care issue and gives the SEC the authority to develop new regulations in that area, if it chooses to do so.

Broker groups have long argued that imposing a uniform standard would increase brokers’ compliance costs and exposure to lawsuits and increase the amounts consumers must pay for help with investments.

In January, the SEC released a stand-of-care issue study that has drawn criticism from House Republicans and groups representing securities brokers.

In March, Republican members of the House Financial Services Committee sent the SEC a letter

opposing any SEC efforts to write regulations that would impose a uniform fiduciary standard. The SEC study failed to provide a sufficient basis for any changes in existing standard-of-care rules, the Republican lawmakers argued in their letter.

The Republicans said the SEC should recognize the risk its standard-of-care recommendations could pose to investors and provide additional justification for changes before making new rules.

“While CFA has long advocated a universal fiduciary duty for personalized investment advice, we understand that members of Congress are likely to be concerned when they hear claims that imposing a fiduciary duty on brokers could increase costs to middle-income and rural investors or cause them to lose access to valued products and services,” Roper says in the CFA letter.

The cost-increase arguments fail to recognize or acknowledge serious shortcomings in existing regulations and ignore aspects of the SEC proposal that are designed to protect the broker-dealer business model, Roper says.

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