The New York Times is reporting that stock and insurance brokers are fighting a provision included in the financial overhaul legislation to ensure decisions are made in the best interest of their clients. According the NY Times:
At issue is whether brokers should be required to put their clients’ interest first — what is known as fiduciary duty. The professionals known as investment advisers already hold to that standard. But brokers at firms like Merrill Lynch and Morgan Stanley Smith Barney, or those who sell variable annuities, are often held to a lesser standard, one that requires them only to steer their clients to investments that are considered “suitable.” Those investments may be lucrative for the broker at the clients’ expense.
The “suitability” issue is a topic which the reverse mortgage industry will need to address in the future. Different states have proposed legislation but nothing has been passed yet. The Times article provides great insight into debating the issue.
The LA Times reported earlier this week that lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation.
In addition, NRMLA submitted comments to the Federal Financial Institutions Examination Council (FFIEC) on proposed new guidelines for reverse mortgages.