U.S. securities regulators recommended a new uniform fiduciary standard on Friday for broker-dealers and investment advisers that would require them to put their retail customers' best interests first.
The proposed new standard, recommended in a study by the Securities and Exchange Commission, would replace the two separate regulatory regimes in place for brokers and advisers today.
Two Republican members of the SEC said there was inadequate evidence a new rule was needed and that it might reduce competition.
In the study, SEC staff said the SEC should require brokers and advisers to act in the best interest of the customer when offering personalized advice to retail customers, regardless of the effect it could have on their own income.
The language is similar to the guideline now applied to investment advisers. Stockbrokers are held to a lesser suitability standard, which is to offer products that are suitable to clients.
A uniform standard would heighten protections for investors and was flexible enough to accommodate different business models, said the study, which has not yet been released by the SEC. Reuters reviewed a copy on Friday.
Commissioners Kathleen Casey and Troy Paredes opposed release of the study, which was required by the 2010 Dodd-Frank financial reform law. They said more regulation might drive brokers and advisers from the field, reduce the instruments that are offered and increase the cost of investing.
(Reporting by Sarah N. Lynch; Additional reporting by Charles Abbott; Editing by Nick Macfie)