FSI Submits Comment Letter to SEC on Proposed Regulation Best Interest

August 7, 2018

Today, the Financial Services Institute (FSI) submitted its comment letter to the Securities and Exchange Commission (SEC) regarding its Regulation Best Interest Proposal.

Click here to read FSI’s comment letter. 

The comment letter highlights several key points and issues including:

  • FSI has advocated for a uniform best interest standard of care for all professionals providing investment advice to retail clients since 2009.
  • The principles-based standard described in the proposal adequately provides the ability for it to address the needs of various business models and clients.
  • The proposed standard of care builds upon and fits within the existing regulatory framework.
  • FSI has advocated for a two-tier client disclosure regime that starts with a one-page, point-of-sale document. The proposed Customer Relationship Summary (Form CRS) meets aspects of this approach, however, some suggested changes include:
    • Shortening the proposed four-page Form CRS to one page with hyperlinks to more detailed disclosures, would allow investors to click through to more information on specific points of concern to them and would improve the likelihood that clients will understand and use the disclosures.
    • Allowing negative consent for electronic delivery.
  • FSI supports restricting the use of the terms “adviser” or “advisor” to those financial professionals who are registered as an investment adviser and dual registrants.
  • FSI supports harmonization of regulations between broker-dealers and investment advisers, particularly in areas in which current broker-dealer regulations provide a level of investor protections that investment adviser regulations do not, including:
    • Federal licensing and continuing education
    • Provision of account statements
    • Rules regarding custody of client funds and securities
    • Supervision, advertising and examination requirements.

FSI appreciates the opportunity to provide our comments on the proposal and looks forward to working with the SEC and other stakeholders as the rulemaking process continues.