A bevy of securities industry trade-group attorneys asked the Iowa Insurance Commissioner today during a virtual hearing to delay the state’s recently proposed best interest proposal to allow firms to meet the Securities and Exchange Commission's Regulation Best Interest.

The Iowa proposal is based on the model regulation approved by the National Association of Insurance Commissioners earlier this year and requires annuity agents and broker-dealers and their reps to act in the best interest of their customers.

“We respectfully request delaying the action on this proposal,” Securities Industry and Financial Markets Association managing director Nancy Donohoe Lancia said at the hearing. “As of June 30, SEC Reg BI will raise the bar from existing Finra suitability standards and apply to all retail and investment accounts including retirement accounts. These recommendations are meaningful and substantial.”

Dan Barry, director of state legislative affairs at the Financial Services Institute, also urged Iowa to delay implementation of the rule to give firms time to implement SEC Reg BI. “While the SEC has maintained its June 30, 2020 implementation date, we believe that the next two months continue to present uncertainty and, as a result, a need for flexibility by both firms and regulators,” Barry said.

If Iowa opts not to delay, Barry said, it is important that the state provide a safe harbor to ensure that firms that are compliance with Reg BI also meet the mandates of Iowa’s rule. He added this would lower compliance costs that otherwise would get passed on to investors.

FSI also asked Iowa to clarify that the proposal doesn’t create a private right of action regarding its best interest obligations for broker-dealers.

Jason Berkowitz, chief legal and regulatory affairs officer at the Insurance Retirement Institute, also testified today that while the annuity group supports the Iowa regulation, it is concerned about “potential inconsistencies” between the Iowa rule and the SEC regulation.

He asked that Iowa delay implementation and create a safe harbor for federally-regulated broker-dealers and registered reps who are compliant with the SEC Reg BI.

“In our view, this would be the most clear and direct way to avoid duplication and inconsistency,” Berkowitz said.

Broker-dealers and registered reps also would not have sufficient time to appropriately comply with the new rules, as its requirements and conditions are complex and would require “significant information technology re-design and build outs to support,” Berkowitz added.