This morning, two House Financial Services subcommittees held a joint hearing to consider the Department of Labor’s (DOL) proposed rule requiring any person who provides guidance to clients about retirement investments to adhere to a universal fiduciary standard of care.

The Subcommittee on Oversight and Investigations and the Subcommittee on Capital Markets and Government Sponsored Enterprises hearing, “Preserving Retirement Security and Investment Choices for All Americans,” examined the current state of regulation that applies to broker-dealers and investment advisers when providing advice to retail investors. The hearing also focused on H.R. 1090, the “Retail Investor Protection Act,” introduced by Rep. Ann Wagner (R-Missouri). The Big “I” supports this bill, which halts the DOL from issuing its rule—an issue the association addressed during its Legislative Conference in April.

The Big “I” submitted testimony at the hearing today, as well as written statements at related hearings earlier this summer held in both the Senate Health, Education, Labor & Pensions Committee and the House Energy & Commerce Committee. However, this hearing is markedly different because the discussion focused on the Wagner bill.

In its testimony, the Big “I” reiterated support for the “Retail Investor Protection Act” because the legislation creates a number of important checks and balances for the rulemaking process to ensure that an expansion of the fiduciary duty does not harm consumers. While establishment of an across-the-board fiduciary standard, either by the DOL (in the retirement investment arena) or the Securities and Exchange Commission (SEC), is a potential source of concern, the development of two competing and conflicting rules is especially troubling. Wagner’s bill prevents the DOL from issuing any regulation related to the expansion of the fiduciary standard until after the SEC issues its final rule on the subject. This relieves the possibility of conflicting and unworkable regulatory standards imposed on broker-dealers and registered representatives.

Second, the measure would require the SEC to submit a report to Congress prior to issuing any regulation. The report would examine, among other issues, whether the different standards of conduct that currently apply to advisors and broker-dealers harm retail investors; whether the adoption of a uniform fiduciary standard would adversely affect consumer access to investment professionals; and whether the SEC could consider alternative responses. This provision would help ensure smaller investors would not lose access to a healthy and affordable marketplace of qualified investment professionals.

Finally, the SEC would be prohibited from expanding the application of the fiduciary standard unless it formally concluded that such a revision would reduce the confusion or harm to retail customers that arises today as a result of different standards of care.

The Big “I” has serious concerns with the DOL proposal and its impact on the retirement advice market and the customers it serves. At press time, the hearing had not yet concluded. Please read News & Views next week for a recap of the discussion.

Jen McPhillips is Big “I” senior director of federal government affairs.