A House Financial Services Committee will begin hearing testimony for and against a controversial bill that would shift regulatory oversight of investment advisors from the SEC to a self-regulatory organization such as FINRA.

Chris Paulitz, a spokesman for the Financial Services Institute, which supports the bill, said his organization was notified of the hearing date on Wednesday and is in the process of determining who will testify at the June 6 hearing.

“We feel good about this,” he said. “Momentum is clearly in our favor. Our goal is get this passed out of committee this year and passed by the full House later this year.”

The Investment Advisor Oversight Act of 2012 was introduced last month by House Financial Services Committee Chairman Spencer Bachus, R-Ala., and Rep. Carolyn McCarthy, D-N.Y. The bill would authorize one or more SROs for investment advisers funded by membership fees.

Paulitz said the FSI and other organizations, including Investment Adviser Association – which opposes the bill – will be lobbying lawmakers up to and after the hearing to have their members’ views heard.  

“This bill would subject thousands of advisory firms to broad rulemaking, inspection and enforcement authority by a private regulator – in all likelihood FINRA. Instead of expanding FINRA’s jurisdiction, the IAA strongly supports strengthened regulation and oversight by the SEC: a single governmental regulator, fully accountable to Congress and the public,” the IAA said in a statement.

There are extremely divergent opinions as to how much this regulatory transition would cost if FINRA were to become the regulator for all investment advisors.

In April, FINRA estimated the start-up costs at between $12 million to $15 million and ongoing operational costs at between $150 million and $155 million. But a Boston Consulting Group report pegged the startup costs at between $200 million and $250 million and $460 million to $510 million for ongoing operations.

Larry Barrett writes for Financial Planning.