Consumer groups called on the Securities and Exchange Commission Wednesday to rework its proposed Customer Relationship Summary disclosure form, or Form CRS, which is part of the regulator’s Regulation Best Interest for brokers, as testing shows investors are confused — and may even be misled — by the form’s disclosures.
Meanwhile, Democratic lawmakers criticized Reg BI in a letter to SEC Chairman Jay Clayton the same day, arguing that “the best way for the SEC to protect investors and reduce confusion is require all brokers and advisers, regardless of their titles, to comply with the same fiduciary standard” as set out in Section 913 of the Dodd-Frank Act.
“Congress provided the SEC with the authority to do this so that the standard of conduct for a broker or dealer would be the same high fiduciary standard applicable to an investment adviser,” the lawmakers wrote.
The Financial Planning Coalition, Consumer Federation of America and AARP commissioned an independent survey of the Form CRS’ usability via Kleimann Communications Group.
The survey found that “participants had difficulties throughout the CRS discerning the differences between the broker and advisor services,” said Susan Kleimann, CEO of Kleimann Communications, on a Wednesday call to discuss the survey’s findings.
Barbara Roper, director of investor protection at the Consumer Federation, said on the call that “measured by the standard the commission itself has identified — does the CRS, as currently designed and drafted, reduce investor confusion and enable informed choice? The answer from our testing is clearly no, it does not. The good news here is that the CRS could be fixed, if the SEC has the will to fix it.”
The groups commissioning the survey “strongly support the creation of a summary document,” Roper said. “In criticizing the [proposed] CRS, we are not criticizing the idea behind it. We just want the SEC to take the time to get it right.”
The qualitative research included 90-minute interviews with 16 individuals across the United States. The survey didn’t look for “statistically significant findings,” Kleimann said.