Early this morning, the Congressional conference committee tasked with reconciling the House and Senate versions of Financial Services Regulatory Reform legislation (H.R.4173, The Wall Street Reform and Consumer Protection Act) agreed on a compromise bill that will be sent to Congress for a final up-or-down vote before going to President Obama for his signature.

NAILBA has a key interest in multiple provisions of this bill:

• A compromise was reached on the standards of care issue.  Instead of a uniform fiduciary standard that includes all brokers and dealers in addition to investment advisors, the SEC will conduct a six-month study of the standards of care used by brokers, dealers and investment advisors.  The SEC will have the authority for further rulemaking regarding standards of care should their findings deem it necessary.  As part of this compromise, the SEC must factor in many NAILBA-supported components of the study including the effect on access to consumers and how additional regulation by the SEC would compliment multiple layers of existing state and federal regulations for these products.
   
• A key NAILBA-supported provision was inserted into the bill that leaves the authority to regulate indexed annuities with the states, thereby preempting the implementation of SEC rule 151a in the 40 states that have adopted the model regulation recently developed by the National Association of Insurance Commissioners regarding suitability standards.  HOWEVER, indexed annuities will be subject to SEC regulation in the states that have not adopted the NAIC model regulation beginning in the year 2013.
  
  
• The legislation creates a Federal Insurance Office within the Treasury Department that will serve as a conduit for information about the insurance industry at the Federal level.  Authority of insurance will be limited to international insurance issues and requires notification of the appropriate Congressional committees of the office’s intent to preempt state law in such matters.
  
  
• The legislation establishes a Consumer Financial Protection Agency (CFPA) .  However, in a big win for NAILBA member agencies and the insurance industry as a whole, a provision was inserted to exempt insurance products from oversight, where it will remain at the state level.
   

Considering the regulatory environment with which we are faced, this is the best possible outcome for NAILBA members and is considered an overall victory for our industry and consumers.

The reconciled version of H.R.4173 is expected to pass both houses of Congress and be signed by the President in time for the July 4 holiday recess.

Please contact Mark Valentini at 703-383-3073 or mvalentini@nailba.org with questions about NAILBA's efforts on regulatory reform or other legislative initiatives.