Democrats and Republicans in Congress may have a hard time working together, but they are pushing the Labor Department and Securities and Exchange Commission to do just that.
This week, a congressional panel will consider legislation that would, among other things, require the SEC and the Labor Department to coordinate their efforts on fiduciary-duty regulation.
"It's a message bill as opposed to a policy bill, and the message is to tell the DOL to slow down and be cautious," said one industry lobbyist, who asked not to be identified, as the bill is developing.
OTHER AGENCIES
The House bill would require the SEC to coordinate its fiduciary-duty work with other federal agencies before proposing a rule, according to two financial industry lobbyists.
This provision could have the effect of slowing the Labor Department's fiduciary work to the SEC's pace.
The Labor Department has indicated that it will re-propose its fiduciary-duty rule in July, though observers expect it to be delayed into the fall. The SEC is conducting a cost-benefit analysis on a fiduciary-duty rule and hasn't yet proposed a measure.
On Thursday, the Capital Markets Subcommittee is scheduled to take up a proposal that would amend the fiduciary-duty provision in the Dodd-Frank financial reform law.
The legislation will be offered by Rep. Ann Wagner, R-Mo., as a discussion draft rather than a formal bill.
Dodd-Frank gives the SEC the authority to promulgate a regulation that would require brokers to act in the best interests of their clients — the same standard that investment advisers meet.
Another lobbyist said that the Labor Department and the SEC have to do more than go through the motions of working together.
“A coordinated and consistent result — one that adequately protects consumers while maintaining needed access to advice — is what's important, not simply a coordinated process,” said Dan Barry, president of Atlantic Policy Solutions LLC. “No matter what the degree of coordination, if the rules aren't consistent in areas where there is overlap, there are going to be problems.”
WITHDRAWN PROPOSAL
The Labor Department first issued its proposal — which would expand the definition of “fiduciary” as it applies to providers of investment advice to retirement plans — in 2010. It was withdrawn after fierce financial industry protest.
Opponents of the DOL's fiduciary rule have warned that it overlaps with the SEC's fiduciary rule and could cause compliance difficulties.
A second provision in the House proposal would require the SEC to determine whether a uniform fiduciary duty would clear up investor confusion about the different standards governing advisers and brokers.
Another provision would require the SEC to show that advice rules harm investors and that a uniform standard would provide a remedy.
The SEC already is collecting data for a cost-benefit analysis that might provide the answers that the House committee is seeking.
Although it is too early to tell how much support the House proposal might generate, dozens of lawmakers have expressed concerns about the DOL's fiduciary-duty rule.
The Labor Department and the SEC have acknowledged that they operate under different laws and likely will issue separate fiduciary-duty proposals.
But they also have indicated that they are working together.
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