The Financial Planning Association is turning up the heat on the Securities and Exchange Commission in hopes of getting action taken on the proposed broker-dealer exemption rule.

The FPA this month filed comments with the SEC asking that the commission withdraw the rule, repeating its assertions that the proposal is flawed and provides no protection for consumers.

Among its arguments is that the SEC has failed to comply with federal administrative law by not adopting a rule in a timely fashion. The FPA also says the SEC has failed to provide clear regulatory guidance on key terms in the proposal, including defining the difference between "full-service brokerage" and "financial planning" services.

The formal request that the SEC withdraw the rules, taken with FPA President Elizabth Jetton's recently commenting that the FPA is considering a lawsuit to resolve the issue, seems to signal the organization is taking an aggressive stance after more than four years of lobbying.

The rule was first proposed by the SEC in 1999, and would expand the broker-dealer exemption to the Investment Advisers Act of 1940 under certain conditions:
The advice is provided on a nondiscretionary basis.
The advice is solely incidental to the brokerage services.
The broker-dealer prominently discloses to its customers that their fee-based accounts are brokerage accounts.

The FPA has been opposed to the rule, basically arguing it provides broker-dealers with a loophole for avoiding regulatory scrutiny. Also, former SEC Chairman Arthur Levitt, who initially proposed the rule, indicated he had changed his mind and now opposed it during a speech he gave in February.

"CFP practitioners are required to disclose all relevant conflicts of interest and other information that is crucial to helping the client understand the financial planning agreement," says Jetton. "We would like to see the SEC restore a level playing field for the consumer, and for financial planners, by providing meaningful disclosure and placing the client's interests first if they represent themselves to the public as financial planners."