U.S. broker-dealer firms are making progress in raising their standards in anticipation of the full implementation of the U.S. Department of Labor’s (DOL) fiduciary rule, suggests a report published on Tuesday from the North American Securities Administrators Association (NASAA).
The report details the results of a survey 96 large, mid-size and small broker-dealer firms to determine the standard of care they were using before to the DOL rule and steps the firms were taking in anticipation of the rule’s implementation.
The rule was initially to be implemented in April 2017, but has since become bogged down in legislative and legal wrangling.
According to the report, prior to the rule, none of the 96 firms surveyed were using anything higher than asuitability standard in the multi-billion-dollar Individual Retirement Account (IRA) rollover market.
However, in the wake of the rule’s initial implementation, “many firms” have taken “significant steps” and expended time and resources to adopt best interests standards for IRA rollovers, NASAA says in a news release.
“These efforts included developing new policies and procedures and providing guidance to agents administering these accounts,” NASAA says.
“The report’s findings spotlight the real and tangible good that came from the Department of Labor’s fiduciary rule,” says Joseph Borg, president of NASAA and Alabama Securities Commission director, in a statement.
“With the responsibility of saving and investing for retirement increasingly falling on the shoulders of hard-working Americans, we must make sure that they have the peace of mind that all qualified financial professionals are giving them advice that is in their best interests,” he says.
The U.S. Securities and Exchange Commission (SEC) proposed its own new conduct standards earlier this month; a U.S. appeal court vacated the DOL fiduciary rule in March.
As a result, “the future of the DOL rule remains in question as the Department of Labor has not indicated what next steps it will take,” NASAA says.
“The investor protection gains made as a result of the Department of Labor’s fiduciary rule should be preserved in any subsequent rulemaking by the SEC or other agencies,” Borg adds. “It would be a shame to let the pendulum swing back.”
Here in Canada, regulators in Ontario and New Brunswick have pledged to adopt a best interest standard, but other Canadian regulators have rejected the idea.