Certain Republican House lawmakers spoke out last week questioning the need for a uniform fiduciary standard, adding more fuel to a legislative debate set to take hold in the coming weeks.
The Republican group, comprised of members of a House Financial Services Subcommittee, sent a letter to the Securities and Exchange Commission last Thursday. In that document, the lawmakers side with two SEC commissioners, who in January called for more justification before implementing a new standard. That dissenting opinion was delivered alongside an SEC study that recommended a uniform fiduciary standard of conduct for broker-dealers and investment advisors.
The proposal for a uniform fiduciary standard aims to have those financial professionals answer to the same requirements and better protect investors. But the Republican group, led by subcommittee Chairman Scott Garrett of New Jersey, said that the study does not consider how the new rule could negatively affect investors. More research and information needs to be provided to justify a change to existing rules, the letter said. The Dodd-Frank legislation does not require that existing rules change, the lawmaker group also said.
“It is our view that the Commission has not identified and defined clear problems that would justify a rulemaking and does not have a solid basis upon which to move forward,” the letter stated.
Before moving forward, the SEC should do a cost-benefit analysis with the consumer and overall market in mind, the group said. At the same time, the SEC needs to consider other regulatory agencies such as the Department of Labor, which has its own proposed rule to change the fiduciary status definition.
The letter was signed by 14 Republican members of the Capital Markets Subcommittee, which is part of the House Financial Services Committee. It was not immediately clear what the Democrat subcommittee members’ stance was on this issue. Capital Markets Subcommittee Ranking Member Maxine Waters (D-Calif.) did not return a request for comment by press time.