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Researchers : Consumer Finance: Regulatory Coverage Generally Exists for Financial Planners, but Consumer Protection Issues Remain
Complete Description: The Dodd-Frank Wall Street Reform and Consumer Protection Act mandated that GAO study the oversight of financial planners. This report examines (1) how financial planners are regulated and overseen at the federal and state levels, (2) what is known about the effectiveness of this regulation, and (3) the advantages and disadvantages of alternative regulatory approaches. To address these objectives, GAO reviewed federal and state statutes and regulations, analyzed complaint and enforcement activity, and interviewed federal and state government entities and organizations representing financial planners, various other arms of the financial services industry, and consumers. GAO found there is no specific, direct regulation of “financial planners” per se at the federal or state level, but various laws and regulations apply to most of the services they provide. The regulatory structure applicable to financial planners covers the great majority of their services, but the attention paid to enforcing existing regulation can vary and certain consumer protection issues remain. First, consumers may be unclear about when a financial planner is required to serve the client’s best interest. Second, financial planners can adopt numerous titles and designations. Finally, the extent of problems related to financial planners is not fully known because of a lack of specific data. While the views of stakeholder interests vary, a majority of the regulatory agencies and financial services industry representatives GAO spoke with did not favor significant structural change to the overall regulation of financial planners because they said existing regulation provides adequate coverage of most financial planning activities. GAO found that given available information, an additional layer of regulation specific to financial planners does not appear to be warranted at this time.
Date Published:Saturday, January 1, 2011
Funding Agency: US General Accountability Office
Type: Report;
Source: Focus groups and/or interviews; Literature review;
Language: English
Audience: Researcher