The Maryland Senate Finance Committee has overwhelmingly voted to recommend the rejection of a pending fiduciary bill.
In fact, 10 out of the 11 committee members voted in favor of a motion to consider Maryland Senate Bill 786 – The Financial Consumer Protection Act of 2019 – as “unfavorable.” That basically serves as a recommendation to the full Maryland Senate floor to reject the proposed legislation. The Maryland legislature is scheduled to adjourn on April 8.
The bill was introduced by state senators Jim Rosapepe, Susan Lee, Bill Ferguson and Mary Washington before the General Assembly of Maryland in February, followed by a Feb. 22 hearing by this same Maryland Senate Finance Committee.
The legislation, which bill covered a wide range of consumer protections followed recommendations made by the Maryland Financial Consumer Protection Commission, which in January issued an interim report with wide-ranging recommendations intended to protect Maryland residents when conducting financial transactions and receiving financial services. The Commission had recommended extending fiduciary duty in Maryland to all financial professionals who provide investment advice, arguing that fiduciary protections at the federal level are currently being reevaluated and were considered likely to be pared back under the Trump administration.
In particular, the Commission pointed out that Maryland law does not explicitly extend a fiduciary duty for investment advice to broker-dealers or their agents, and argued that extending fiduciary duty to all financial professionals who provide investment advice would better align the duties of all financial advisors, ensuring that they all give advice in the best interests of investors. Furthermore, the Commission argued that such a state-level fiduciary duty would further protect Maryland investors from possible predatory practices and provide recourse to Maryland investors who may be ill-advised by a financial professional.
More Than Maryland
In the wake of the vacating of the Labor Department’s fiduciary rule by the Fifth Circuit, a number of states have moved to impose their own set of fiduciary standards on advisors, including New Jersey, Nevada and Connecticut.
The American Retirement Association has continued to weigh in on these proposals, supporting a fiduciary standard, but reminding state officials that ERISA “already provides a uniform body of benefits law and regulation that protect participants and beneficiaries from impermissible conflicts of interest.”