Thomas D. Currey, CLU, ChFC, past president of the National Association of Insurance and Financial Advisors will testify June 6 before the House Committee on Financial Services on behalf of NAIFA in support of the Adviser Oversight Act of 2012.
The Act would require a self-regulatory organization (SRO), such as the Financial Industry Regulatory Authority (FINRA), to regulate investment advisers currently registered with the Securities and Exchange Commission.
“NAIFA members support smart, balanced regulation – regulation that provides appropriate consumer protections and effective and efficient oversight without creating compliance burdens that would impede the delivery of consumer financial services,” Currey said in his written statement to the Committee. “H.R. 4624 satisfies those criteria.”
He will emphasize in his oral testimony that requiring broker-dealers and investment advisers to be subject to two distinct regulatory regimes and examination processes is burdensome and unnecessary. This is in no one’s interest. Allowing the development of coordinated rules and examinations over both sides of the business would best serve investors.
Citing limited resources, the SEC currently examines less than 10 percent of investment advisers each year. More than a third of investment advisers have never undergone an SEC examination, creating a regulatory gap that could leave consumers vulnerable and damage the reputation of the entire financial services industry.
Nearly two-thirds of NAIFA members are registered representatives of broker-dealers, subject to regulation by FINRA. In contrast to the SEC’s oversight of investment advisers, FINRA examines well over 50 percent of broker-dealers each year, and broker-dealers perform compliance reviews on 100 percent of their registered representatives each year.
Some 41 percent of NAIFA members who are registered representatives are dually registered as investment adviser representatives for corporate Registered Investment Advisers.
“NAIFA members who sell securities, by and large, are already subject to FINRA oversight,” Mr. Currey said. “That’s not likely to change, so it just makes sense for our dually registered members to undergo broker-dealer and investment adviser examinations at the same time, by the same regulator.”
Mr. Currey will expand on NAIFA’s position at the hearing entitled, “H.R. 4624, the Investment Adviser Oversight Act of 2012,” June 6 at 10 AM in 2128 Rayburn HOB.