The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“PROPOSED FIDUCIARY STANDARDS” mentioning the U.S. Dept of Labor was published in the House of Representatives section on pages H4959-H4960 on July 9, 2015.
The publication is reproduced in full below:
PROPOSED FIDUCIARY STANDARDS
The SPEAKER pro tempore. The Chair recognizes the gentleman from Florida (Mr. Jolly) for 5 minutes.
Mr. JOLLY. Mr. Speaker, most economists and financial advisers have recognized that families across the United States are headed toward a major retirement crisis. Studies have shown that a majority of households headed by someone aged 59 or younger are in danger of suffering from falling living standards in their retirement years.
And so the administration and this Congress should be advancing policies that make retirement counseling, savings advice, and investment services more accessible, not less. Retirement planning, savings counseling, and investment advice can improve the quality of life and economic stability of every American.
Yet recent actions by this administration, however well intended, will make these financial services less accessible and less affordable to those who are in most need of them by forever changing the rules regarding financial advising related to retirement accounts.
Mr. Speaker, for years the community of financial advisers, including those throughout Pinellas County and the Tampa Bay area that I have the privilege to represent, has been governed by what is known as the suitability standard; that is, a financial adviser is required to provide financial counseling and investment recommendations that are suitable for a client based upon that client's financial position and financial goals. The suitability standard requires advisers to act fairly in dealing with clients.
This suitability standard has served individual investors well for many years, creating a market for financial services for new and low dollar investors seeking basic investment services and thoughtful financial and retirement planning.
But the administration is now in the process of replacing that standard with a new standard called the fiduciary standard. This new standard, under the guise of protecting investors, will actually have the opposite effect. The administration's proposed rule will ultimately reduce or, in some cases, eliminate financial counseling, products, and services to new and low dollar investors. The rule will result in the elimination of financial products that adequately compensate advisers for their services, and it will increase the cost of compliance on advisers who ultimately will need to pass on those costs to clients through a higher fee structure. And it will simply cause some advisers to cease serving many clients who are, in fact, in most need of financial services.
But worse, Mr. Speaker, the Department of Labor's new rule reflects the approach we continue to see from regulators throughout this administration, an arrogant and demeaning suggestion that industry throughout America is necessarily comprised of all bad actors, and unless these actors are forced to do so by this administration, they will no longer do right or do good but for the heavy hand of government and the heavy hand of this administration making them do so. It is a Washington-knows-best approach that communities across the country continue to reject.
My message today is a simple one: The administration can do better. Do not issue the proposed new fiduciary standard rule.
The Department received thousands of comments about the proposed rule and seemingly ignored them all.
Members of Congress from both sides of the aisle have sent letters to the Department of Labor expressing the negative impacts that this proposal would have on their communities, and we have begged the Department of Labor to revisit this rule and simply do better on behalf of the American people.
Congress has also taken action on its own and will continue to do so. Recently, the Appropriations Committee included provisions within their respective bills in the House and Senate to halt the administration from moving forward on this perhaps well-intended but completely wrong proposed rule. It was right that we did so.
The administration simply must do better. It starts with recognizing that the financial adviser industry is comprised of men and women across this country who provide a valuable contribution to individuals and couples seeking retirement guidance.
Then let's realize that transparency and sunlight can solve most concerns. But to instead impose a new legal standard that will only increase compliance cost, result in expensive and needless litigation and ever more trial attorney fees and will ultimately eliminate financial counseling to hundreds of thousands of families who need it most, well, Mr. Speaker, that is the wrong answer.
Let's keep the suitability standard. Let's trust financial advisers for the good service they provide. Let's strictly enforce the current law against the very small number of individuals who seek to take advantage of individual investors. Let's protect financial services for those who need them most. And let's revisit a rulemaking process that focuses only on transparency, ultimately providing consumers and clients with the information they need to make responsible investment decisions and to responsibly select a financial adviser that is right for them.
It is time that this administration begins trusting the American people.
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