House Financial Services Committee Chairman Jeb Hensarling said he believes the Securities and Exchange Commission can stop the Department of Labor’s fiduciary rule, which could potentially limit families from obtaining financial advice, during a hearing Wednesday.
Critics of the rule, which would expand the scope of regulations placed on financial advisers, say its implementation would lead to increased fees and lower returns on retirement investments for those seeking financial advice.
Republican lawmakers called on the SEC to put forth its own plan in hopes of stalling the new regulation, which is strongly supported by the Obama administration.
“The SEC has an opportunity to act and stop the Labor Department from making financial advice and retirement planning less available and more expensive for Americans with low and moderate incomes,” Hensarling said. “Real investor protection comes from innovative capital markets that are vigorously policed for fraud and deception, allow capital formation to flourish, and give investors the freedom to make informed investment decisions free from government interference and control.”
SEC Chairwoman Mary Jo White told the panel the agency is working on a proposal, but wasn’t able to give a timeframe of when it would be released.
Rep. David Scott criticized the SEC for allowing the DOL to infringe on the authority it was given under Dodd-Frank to analyze the effectiveness of financial regulations and produce a uniform fiduciary rule.
The DOL was not given that authority, but supporters of the DoL rule say it’s valid because the DoL has authority over the Employees Retirement Income Security Act.
Scott said the DOL should not be responsible for defining who falls under the umbrella of financial regulations. “I want you to make it plain, seize your authority back on this fiduciary issue,” he said.
Hensarling called on the agency to provide the committee with an in-depth economic analysis on how it will affect investors ahead of its rule proposal.
White said there will be a strong emphasis on making sure affordable financial advice is available, but it “is a long, complex exercise, and it has to involve the full commission.”
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