Another great incentive initiated by the state of Maryland is rejected by the lawmakers of the state. The bill that was introduced in February of 2019 by the group of state senators had protectionism of consumers at its foundation. It was intended to protect financial consumers when conducting financial transactions and receiving financial services. It was a well-intended legislature to benefit the residents of the state of Maryland since our federal government, along with 5th Circuit court effectively repealed the Labor Department’s fiduciary rule.
This leads to a broader question “Why the consumers do not get any help from its government to be protected against the repeat of bad banking, predatory lending, etc.?”. The financial professionals must act as fiduciaries for their clients to put their interest to be a priority. However, a law that would make acting otherwise illegal also makes lawmakers antagonistic. It makes me think they rather serve other interests than the public. Of course, the opponents of Maryland and Nevada state fiduciary law prefer to argue that soon to be disclosed new Security and Exchange Commission proposal will cover all the grounds. Also, it will be on the federal level, so it would mean more of the uniform law and less of paperwork.
However, they forget to mention that in comparison to the original DOL fiduciary rule, the SEC proposal is way more relaxed towards fiduciary obligations required from the BDs, RIAs and financial advisers. It leaves various loopholes that can be exploited against the consumer and lessens the burden of the fiduciary responsibility, which is benefiting the industry, not the public.