• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Mortgages
    • Taxation
  • Fintech
  • Regulation
  • In Depth
  • Special Reports
  • Video
  • Directory
  • Advertise with us
  • Events
  • Middle East Hub
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Events
    • Upcoming events
      View all events
  • Middle East Hub
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • In Depth
  • Special Reports
  • Video
  • Directory
  • Insurance

Fiduciary Rule battle rages on in US, as SEC head vows to ‘work with DOL’ on plan

Fiduciary Rule battle rages on in US, as SEC head vows to ‘work with DOL’ on plan
  • Helen Burggraf
  • 06 October 2017
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

Ever since the US’s long-awaited Fiduciary Rule partially took effect in June, the matter of whether it should ever be fully implemented – or rather, killed off – has raged on in Washington and elsewhere.

The latest development, earlier this week, took the form of a statement by US Securities and Exchange Commission chairman Jay Clayton that the SEC was moving in the direction of drafting a fiduciary rule “proposal” as it prepared to work in conjunction with the Department of Labor to come up with a final version of fiduciary legislation that would address concerns on both sides of the argument.

Related articles

  • US investment industry, gov’t embark on ‘best interest’ debate
  • Fiduciary Rule decision creates uncertainty for US retirement advice industry
  • US chairman of SEC vows to go ahead with version of Fiduciary Rule
  • Fiduciary rule: from today, US retirement advice must be in client’s ‘best interest’

The DOL is the agency responsible for the version of the rule that came partially into force in June, and which is currently on hold pending a review ordered by President Trump.

The SEC is in the process of consulting on the matter of the rule, as part of its review.

According to media accounts of Clayton’s comments, which he made during an appearance before the House Financial Services Committee,  the SEC chairman is leaning in the direction of giving investors the choice of using as their adviser, when planning for their retirement and purchasing retirement products, someone who either is or is not bound by the fiduciary rule.

Currently in the US, registered advisers are bound by a 1940-era version of the Fiduciary Rule, which obliges them to disclose any conflicts of interest and put their clients’ interests ahead of their own, when recommending investment products; those who handle retirement products, such as insurance brokers, however, are required to meet a lesser “suitability” standard. The rule he advisers adhere to was set fort in the Investment Advisers Act of 1940.

As reported, in August the final implementation date of the controversial Fiduciary Rule – an Obama-era set of regulations that is at odds with the Republican party and Donald Trump’s anti-regulatory philosophy – was officially moved back, by 18 months, to 1 July, 2019, which was widely seen as a move by the new administration to buy time to significantly revise key elements of it that have been opposed by Republican lawmakers and certain business interests, including some major financial services companies that specialise in retirement products.

Opponents of the law have argued that it’s too complex and would increases the risk of costly litigation, with the likely result that investors with modest retirement accounts would struggle to find brokers willing to provide them with advice, as they wouldn’t be deemed to be worth the trouble and risk.

Those in favour of the Fiduciary Rule argue that the existing model isn’t fair to investors, and results in investors too often being sold products with high fees, and which might have been recommended to them by the broker because he or she would benefit from their sale, not because they were the best product for the investor in question.

One of the side effects of the debate is that many more Americans are aware of the fact of the proposed Fiduciary Rule than were before, and have made clear their belief that they should only be offered products that are in their best interests.

States taking growing interest 

Another by-product of the increasingly public debate is that a number of US states have begun to take an interest in whether their residents are adequately protected by the existing legislation.

Last month, the Wall Street Journal reported that governors of Nevada and Connecticut had “signed bills to expand or amplify ‘fiduciary’ requirements for brokers” operating within their state lines, while “legislators in New York, New Jersey and Massachusetts have introduced similar bills… and several other states, including California, have indicated interest in exploring such requirements”.

Some industry observers, meanwhile, have argued that the logical thing to do would be to extend the relevant provisions of the Investment Advisers Act of 1940, which governs the way US registered advisers sell investment products,  to those selling retirement products. They note that because the Advisers Act is a “principles-based standard” rather than a rules-based one – as the new Fiduciary Standard is currently set out to be – it simpler and more easily-adapted to the marketplace

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • Insurance
  • Life Insurance
  • Pensions
  • Regulation
  • US
  • Fiduciary Rule
  • US Securities and Exchange Commission

More on Insurance

Singapore watchdog revokes CT Bright Investments licence

  • Regulation
  • 12 December 2019
Labuan IBFC welcomes 'innovative digital business' revolution in Asia

  • Regulation
  • 12 December 2019
Lloyds under fire for failing customers hit by fraudsters

  • Regulation
  • 11 December 2019
HSBC Swiss unit fined $193m over US tax evasion

  • Regulation
  • 11 December 2019
Deutsche Bank slapped with €15m fine in money laundering case

  • Banking
  • 10 December 2019
Back to Top

Most read

Goldman Sachs to offer wealth management from $5,000
Goldman Sachs to offer wealth management from $5,000
Luxembourg watchdog freezes €87m in anti-money laundering push
Luxembourg watchdog freezes €87m in anti-money laundering push
HMRC hit with almost half a million refund requests
HMRC hit with almost half a million refund requests
Latin American AuM will more than double by 2025: PwC report
Latin American AuM will more than double by 2025: PwC report
HSBC makes changes at the top ahead of overhaul
HSBC makes changes at the top ahead of overhaul
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017