Financial Industry Regulatory Authority Chairman and CEO Richard Ketchum sent mixed signals Friday on his feelings about the possibility of a strong fiduciary standard for brokers.

“Suitability rules for brokers combined with regular exams provide strong protections,” Ketchum told a Congressional hearing. “(They are) things investors should feel very good about.” 

At the same time, Ketchum said the SEC should “look at” a consistent fiduciary duty. Part of that review, said Ketchum, should be a cost-benefit analysis.

Later in the House Financial Services Committee session, he said he believes there should be a best-interest standard to improve disclosures and conflicts of interests.

Speaking on the Labor Department’s proposal of a fiduciary standard for pension fund advisors, Ketchum said, Finra is still working on preparing a formal written comment. However, he added it is preferable for the SEC to be the expert agency on fiduciary responsibility.

At the meeting, Financial Services Subcommittee Chairman Scott Garrett (R-NJ) took several shots at Finra.

Garrett said small brokers have told him they have no say at Finra. Ketchum responded they have a lot of input.

He countered the Congressman’s claim that Finra has become a quasi-government agency, a deputy SEC.

In another attack, Garrett said Finra is wrongly stepping into personal investing decision-making of everyday Americans.

He charged Finra’s proposed CARDS database of all broker transactions would be costly, intrusive and burdensome with high compliance costs that could put small brokers out of business.

On CARDS (which stands for Comprehensive Risk Data System), Finra is looking at ways to improve early warning of serious fraud and sales practices violations using existing technology rather than using that system.

Ketchum said while CARDS was designed to hide personal information from Finra workers, he understands concerns by investors and the industry that the system could be hacked to find Social Security numbers and other information that could be used to prey on clients.

During his testimony, Ketchum said a Finra task force will be making recommendations on improving arbitration and mediation by December.

He promised the agency will review the suggestions promptly.