House Retirement Subcommittee Approves Bill to Prevent Conflicted Investment Advice
WASHINGTON, D.C. -- The Subcommittee on Health, Employment, Pensions and Labor of the House Education and Labor Committee today approved legislation by a 13 to 8 vote to protect workers from conflicts of interest when receiving retirement investment advice at work.
“The American retirement system has already suffered $2 trillion in losses due to last year’s economic collapse. Now more than ever, Americans cannot afford to subject their hard-earned retirement savings to the increased threats posed by conflict-driven advice,” said U.S. Rep. Rob Andrews (D-NJ), chairman of the subcommittee. “Working Americans deserve and require conflict-free advice so that they can make informed and responsible decisions about their financial future.”
The Conflicted Investment Advice Prohibition Act of 2009 (H.R. 1988) would restore federal safeguards that ensured that investment advice provided to workers on their employer-sponsored retirement plan be independent and free from any conflicts of interest.
Protections against providing conflicted investment advice were watered down by the Pension Protection Act and a midnight proposal rushed through by the Bush administration’s Department of Labor. These actions opened the door for financial services companies to provide advice to employees where they had a direct or indirect financial interest.
The Conflicted Investment Advice Prohibition Act will restore workers’ protections by laying out clear rules to ensure that workers receive investment advice at work that is based solely on interests of the account holder’s needs, not investment firms’ bottom line.