The Securities Industry and Financial Markets Association supports a controversial proposal that  mandates brokers disclose bonuses paid as part of their recruitment package.

On the final day before FINRA’s recruitment compensation disclosure proposal closed for comments, the industry trade group, which represents hundreds of securities firms, banks and asset managers, said that the move was in-line with its idea of a uniform fiduciary standard and would provide customers with additional transparency.

“A tenet of a uniform fiduciary standard of care for both registered representatives and registered investment advisors is necessary and adequate disclosure,” senior managing director and general counsel of SIFMA, Ira Hammerman, said in a statement. “Investors should know up front about any potential conflicts of interest, and those disclosures should be in clear, plain English.”

The rule, which has provoked a strong response from both sides, would require brokers switching firms to disclose enhanced compensation such as singing bonuses, upfront or back-end bonuses, loans, accelerated payouts and other offers above $50,000 to any clients contact.

According to FINRA’s original proposal, the goal would be to address a potential conflict of interest and help clients understand why an advisor is moving firms.

“Once the client understands the practical and personal import of the potential conflicts, the client can then make an informed decision about whether to switch firms with their broker,” SIFMA wrote. “SIFMA believes that at key moments in the investment process, investors need clear, targeted and understandable disclosure on key factors for their investment decisions.”

Since opening at the beginning of the year, however, the request for comment has drawn more than 35 responses from brokers, recruiters, securities firms, and watch groups, the majority of which have been negative. Concerns range from whether the rule could unfairly impact small firms to the potential violation of a brokers’ privacy.

“We anticipate that a number of our member firms will be filing individual comment letters on the Proposed Rule, reflecting a range of view on, among other things, the appropriate level of detail in the proposed disclosures,” SIFMA wrote in a footnote.

SIFMA itself weighed in against a specific area in the request for comment, the idea that brokers should provide disclosures while at previous firms.

“The registered representative’s new firm has no effective mechanism to supervise compliance with the disclosure requirement because the registered representative is not yet associated with the new firm,” the group wrote.

CHECK OUT: FINRA Seeks Comment on Comp Disclosure

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