New President is in, what’s in store for the SEC and Reg BI?

Ever since the SEC first announced its Regulation Best Interest, many in the financial services industry have been doubtful about its longevity. We saw the DOL rule come and go, and this has really made it seem like new regulation doesn’t last.

With this new administration, we’ve already started re-assessing Reg BI and its shelf life. At first glance, it appears Joe Biden and the Democrat majority government will keep the regulation around and, if anything, strengthen it. Traditionally, Democrats have been the party of financial regulation while Republicans have pushed for more de-regulation.

Only days after Biden was inaugurated, we already know who he will appoint to be the new SEC chair. Just based on his history in the Obama administration, most are predicting that he will be a lot stricter on implementing financial regulations than his predecessor.

Along with this, the SEC has also recently indicated that they plan to ramp up their Reg BI examinations this year. This means regulators will be focusing on how businesses are complying with Reg BI and what processes they have implemented. Furthermore, the SEC has stated that “Failure to have adequate written policies and procedures and failure to have adequate supervisory and compliance oversight may indicate recurring issues in complying with Regulation Best Interest.”

Even though it is definitely looking like Biden’s new administration is, overall, indicating a strict enforcement of Reg BI, some voices in the democratic party are urging Biden to rescind the regulation. We’ve seen over the past year that  both sides of the aisle have issues with this regulation, and even among the democratic party there may not be a consensus on how to handle Reg BI going forward.

All in all, it is certainly looking like we are still going full-steam ahead with Reg BI, and those in the financial services industry should keep an eye out for even more regulation on the horizon. At RiXtrema, we’ll be continuing to keep an eye on things and will make sure advisors can stay prepared despite changing regulatory environments.