FINANCIAL PLANNERS fear that the U.S. Securities and Exchange Com- mission (SEC) may propose something less than a full fiduciary standard for
sellers of retail investment products.
The SEC is supposed to comply with
a standard-of-care study provision in the
Dodd-Frank Wall Street Reform and Consumer Protection Act by giving Congress a
report on the topic by Jan. 21. In the report,
the SEC will outline its plans for dealing
with the current regulatory differences in
the treatment of advisors and brokers.
Today, advisors must abide by a fiduciary
standard, which requires advisors to put
clients’ interests ahead of their own.
Broker-dealers, and life agents who sell
securities, must abide by a suitability standard, which requires them to verify that the
products sold to consumers appear to suit
the needs of the consumers.
Kurt Rostad, chairman of the Committee
for the Fiduciary Standard, Falls Church, Va.,
said in an interview that he fears the SEC will
propose a standard for broker-dealers that
#4 Planners Nervous About
Standard of Care
will simply require agents and brokers to tell
clients about possible conflicts of interest.
“Our concern is that the securities industry is lobbying forcefully for having disclosure alone suffice to address a material
conflict of interest,” Rostad said.
Rostad said advisors believe conflicts should be mitigated, not merely disclosed. “The standard must be that the
transaction must always be in the best
interest of the client,” he said.
The Committee for the Fiduciary Stan-
dard has made the same argument in a
comment letter submitted to the SEC.
Terry Headley, president of the National
Association of Insurance and Financial Advisors, Falls Church, Va., said he thinks a uniform fiduciary standard policy could open
agents and brokers up to litigation based on
second-guessing about investments years
after sales were completed.
“The practical application of a fiduciary
standard in the marketplace is critical,”
Headley said. “To us, ‘fiduciary duty’ is a legal relationship. Within a legal relationship,
there are certain liability risks.” NU
#5 Calif. Asks Health Insurers
to Slow Increase Requests
By ALLISON BELL
DAVE JONES, the new California insurance commissioner, is
asking big carriers to refrain
from increasing premiums
for at least 60 days after
the effective dates of their
most recent rate filings.
The request would affect carriers with increases already set to
take effect between Jan. 1 and April 1.
California health insurers have asked for
a series of increases in individual rates this
year.
The insurers have attributed the requests to increases in overall health care
t s
for at least 60 days after
costs and use of health
care services; the effects
of new state and federal
benefits requirements,
including the new federal Patient Protection
and Affordable Care Act
(PPACA); and a severe
recession that is leading
healthier holders of individual coverage to drop their coverage.
The California insurance commissioner
has no authority to reject a request for a
premium increase, but a commissioner
can review an increase notice to ensure
that it meets California filing requirements,
Jones says.
s
i
of new state and federal
benefits requirements,
including the new fed-
eral Patient Protection
and Affordable Care Act
s
e
A new state law, created by California
Senate Bill 1163, requires a health plan or
health insurer to provide an actuarial analysis explaining the need for an increase.
The new law also increases the advance
notice period for a health rate increase to 60
days, from 30 days.
Jones says he is asking for spacing
between increases to give himself more
time to apply state rate filing review requirements.
“I am very concerned about the impact
of the premium increases that health insurers are proposing, increases that I have
not had the opportunity to review,” Jones
says in letters addressed to large California
health carriers. NU
