Three professional financial associations are urging the commission to not delegate the oversight of independent advisors to FINRA. The SEC is in the process of analyzing this issuing as part of the Dodd-Frank Act.
The groups are: the CFP Board, the Financial Planning Association and the National Association of Personal Financial Advisors. In their letter to the SEC, they say they represent a combined 75,000 financial planners in the United States.
“We urge the Commission to determine it can adequately regulate investment advisers without delegating such responsibility to an SRO, especially the Financial Regulatory Authority [FINRA],” the groups wrote in their letter.
It acknowledges the crushing workload, and lack of resources, at the SEC. But it states that Dodd-Frank puts the commission in a better position. It notes that the expansion of state-registered advisor jurisdiction will help lessen the SEC’s burden.
The letter goes on to say that FINRA’s position is that it is capable of stepping in and taking responsibility for investment adviser oversight. But it flatly disagrees. “We do not believe that outsourcing oversight to FINRA would benefit investors,” the letter says. “FINRA is an SRO for broker dealers, not investment advisers. It does not have any experience examining or enforcing the Advisers Act. More generally, FINRA does not have any experience interpreting and applying concepts of fiduciary duty, or enforcing as principles-based standard of care such as the one that applies to investment advisers.”
FINRA did not respond to a request for comment by press time.
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