FSI says it wants to see a more realistic approach that requires firms to adopt written supervisory procedures to detect and manage conflicts of interest, to avoid those they can and take steps to mitigate the impact of those conflicts that can’t be avoided.
FSI recommended procedures that: 1) Identify conflicts of interest inherent in their business model, means of product distribution or service model; 2) Assess whether each conflict is material; and, 3) Develop a means of avoiding the conflict, mitigating its impact and/or disclosing the conflict to the customer if the conflict is material.
“Further, we contend that the SEC can integrate any future standard of care into the investor protections provided by the existing regulatory framework,” Brown says.
“Any uniform best interest standard created by the SEC should build upon, and fit seamlessly within, the existing and long-standing securities regulatory regime for broker-dealers and investment advisors.”