The American Council of Life Insurers (ACLI) questioned the purpose and merits of an ill-advised lawsuit by eight attorneys general last week against the Securities and Exchange Commission’s Regulation Best Interest (Reg BI).
ACLI supports rules requiring all financial professionals, when making a recommendation, to act in the consumer’s best interest — with care, skill, and diligence — based on the consumer’s financial needs and objectives. Consumers should know about the types and scope of services to be provided and compensation to be received by the financial professional. We also support requirements to identify and eliminate or mitigate and disclose conflicts of interest.
All of this is consistent with the strong consumer protections in Reg BI.
But these eight attorneys general have convinced themselves that Reg BI will not do enough to protect consumers. They want Reg BI replaced with the Department of Labor’s former fiduciary rule.
Never mind that the fiduciary rule:
· Was struck down by a federal court in 2018
· Eliminated access to crucial information that consumers need to secure their retirement
· Made it harder for lower- and middle-income consumers to access guaranteed retirement income products
“This flawed regulation eliminated choice and access to information that every day consumers need to secure their retirement,” Neely said. “Reg BI’s approach is much better suited for Main Street consumers. It provides enhanced protections and preserves access to a variety of retirement products and guidance from professionals acting in consumers’ best interest.”
The attorneys general also alleged that the SEC failed to complete a directive in the 2010 Dodd-Frank Act that required it to write rules establishing a fiduciary standard for broker-dealers to replace the suitability standard. And they claimed the SEC did not perform a thorough cost-benefit analysis.
Wrong on both counts. The SEC’s Reg BI is wholly consistent with Dodd-Frank’s requirements. Moreover, the SEC exceeded official rulemaking requirements when crafting Reg BI, soliciting input from all stakeholders to thoroughly analyze the regulation’s costs and benefits.
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