The full House approved on Wednesday House Financial Services Committee Chairwoman Maxine Waters’ amendment to block the Securities and Exchange Commission from enforcing Regulation Best Interest.
The House voted 227-200 to pass Waters’ amendment along with a package of other changes to HR 3351, the Financial Services and General Government Appropriations Act. The provision would prevent the SEC from proceeding to implement, administer, enforce or publicize Reg BI.
The Insured Retirement Institute said after the vote that it was “disappointed.”
“Congress should allow the implementation of Reg BI to move forward and it should be given time to work,” it said in a statement. “This newly adopted rule raises the standard of conduct for financial professionals, expressly requiring them to act in their clients’ best interest.”
Waters’ amendment likely faces a tough road in the Senate, however.
“Reg BI represents a substantial strengthening of consumer and investor protection compared to existing law,” IRI said in a statement. “It requires all financial professionals including those that work for and with IRI member companies, to operate under a new, more stringent and robust regulatory regime that imposes considerable new responsibilities on financial professionals and firms.”
Waters, of California, was among 35 House Democrats who complained to SEC Chairman Jay Clayton late last year that the agency’s Reg BI — part of the securities regulator’s much-anticipated advice standards package — was not a true fiduciary standard.
Investment Company Institute President and CEO Paul Schott Stevens said that Reg BI ”ensures investors are afforded strong protections when they receive recommendations from financial intermediaries. Passage of this amendment seemingly relitigates the DOL fiduciary rule, which was vacated by the Fifth Circuit Court.”
Preventing the SEC from implementing Reg BI, Stevens added, “creates a legal void that leaves millions of retail savers without critical investor protections. ICI urges Congress to strip this language from the final spending bill.”
— Related on ThinkAdvisor: