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FSI Warns on DoL Fiduciary, FINRA CARDS Rules

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WASHINGTON -- FSI's lobbying team wants its members to tell Congress: Just say no.

The organization is working to stoke opposition to a bevy of regulatory proceedings, including the Labor Department's plan to impose fiduciary responsibilities on advisors working with retirement plans and FINRA's controversial data-collection proposal.

"The Department of Labor fiduciary issue continues to be our top priority," says Robert Lewis, FSI's vice president of legislative affairs, who spoke Monday at the group's Financial Advisor Summit.

FSI has been one of the more vocal critics of DoL's fiduciary proposal; the group argues that the plan could effectively end the commission-based sales model for advisors working in the retirement space.

Lewis and his team have been making the rounds on Capitol Hill meeting with members and staffers to raise concerns about the proposal; more than 200 representatives and senators of both parties have signed on to letters of opposition to the proposal.


Now Lewis, who worked as a Hill staffer earlier in his career, is urging FSI members to reach out to their congressmen to voice their opposition. At any given time, members and staffers are juggling scores of issues, he says -- so when an advocacy bloc falls silent on a particular policy area, it tends to move to the back burner on the Hill.

FSI members "have to continue to keep the interest in it," Lewis says. "We don't want the momentum that we've built up on this to kind of fade away."

FSI has been fighting the Labor Department's fiduciary proposal since an earlier version was released in 2010. Amid widespread opposition, the department pulled that draft and has since been working to reformulate the rulemaking proposal, promising that when it is released, it will come with a rigorous economic analysis justifying the need for rules to guard against conflicts of interest in the retirement market.

After a series of delays, the department is currently on track to release its proposal early next year. "We're proceeding under the assumption that we're going to see a proposal sometime," says Dale Brown, FSI's president and CEO.


FSI is also keeping a close eye on efforts underway at FINRA to require regulated firms to submit trading and account data through the so-called CARDS program -- short for Comprehensive Automated Risk Data System.

FINRA has already backed off an earlier proposal that would have collected personally identifiable information through CARDS, but critics continue to warn of the plan's security and cost considerations. The program is "at the top of our regulatory list," says Robin Traxler, FSI's vice president of regulatory affairs.

"This is a major issue because there's clearly data security concerns," Traxler says. "And then there's just going to be major costs involved in this endeavor -- costs to the firm and costs that will probably trickle down to the advisors, as well."


Traxler also notes that FSI is monitoring FINRA's ongoing efforts to overhaul BrokerCheck to make more information about financial professionals -- including background checks and, potentially, the scores of advisors' Series 7 exams -- available to the public.

FSI is urging FINRA to proceed judiciously when expanding public-reporting requirements, suggesting that information about recruitment bonuses and old test scores says very little about financial professionals' ability to serve their clients.

"Our argument is that ... after you've been in the industry for so many years and you've got so much experience, what you scored on an exam years ago really isn't relevant information to the investor," Traxler says. "So we're really going to be advocating that FINRA, if they need changes to BrokerCheck, are including information that really informs the investor and is relevant to their decision."

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