House Prepares to Vote on Anti-Investor ‘Retail Investor Protection Act’
As the House of Representatives prepares to vote this week on legislation that would impede the ability of regulators to strengthen protections for investors and retirement savers who turn to financial professionals for investment advice, CFA wrote to members urging them to vote no on “this harmful and misguided legislation.”
H.R. 1090, the cynically misnamed “Retail Investor Protection Act,” would impose new study requirements on the Securities and Exchange Commission (SEC) before it could adopt regulations to impose a fiduciary duty on broker-dealers when they provide investment advice and would require the Department of Labor to halt its efforts to strengthen protections for retirement savers until after the SEC acts.
“Investors and retirement savers need and deserve advice that puts their interests first,” CFA Director of Investor Protection Barbara Roper and Financial Services Counsel Micah Hauptman wrote in a letter to all House members. “No one who sincerely supports a best interest standard for investment advice can support this legislation, the only purpose of which is to impede regulatory efforts to achieve that goal.”
While the legislation enjoys strong Republican support which should assure its House passage, the real threat to the DOL’s efforts to strengthen protections for retirement savers is expected to come from efforts to attach a rider to an end-of-year spending bill.
“Industry is spending millions on a lobbying campaign aimed at killing, delaying or fatally weakening the DOL rule,” Roper said. “Members of Congress face a stark choice between standing up for vulnerable workers and retirees or maintaining a status quo that is highly profitable for financial firms that profit at retirement savers’ expense. We are urging members to oppose any legislation that would interfere with the DOL rulemaking as it enters its final stages.”
Groups Call for Investigation of Recent Data Breaches
Consumer and privacy groups, including CFA, wrote a letter to the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) earlier this month urging them to fully investigate recent reports of a significant data security breach affecting T-Mobile customers and application for service whose information was stored by Experian. The data breach reportedly included names, addresses, Social Security Numbers, and birth dates, as well as other information from 15 million people.
“We believe that it is incumbent on the regulatory agencies to fully investigate this breach, including whether other Experian databases have been breached,” the groups wrote. “As you know, Experian is one of the three nationwide consumer reporting agencies (CRAs), each holding data on over 200 million consumers. A data security breach that affected Experian’s credit report files would be a terrifying and unmitigated disaster.”
“The undersigned organizations have worked on security breach issues for decades. We believe this breach, occurring at one of the nationwide CRAs, takes this problem to a whole new and dangerous level given the extraordinarily large amounts of critical financial information they hold,” the groups stated. “Identity thieves could play havoc of an unimaginably huge scale with access to such data, with potentially devastating consequences to consumers, financial institutions, and the American economy. We urge the CFPB and FTC to devote their fullest resources to addressing this issue.”
Senate Urged to Act on Hide No Harm Bill
CFA has joined a coalition of consumer safety, public health, environmental and other groups in calling on the Senate to adopt Sen. Richard Blumenthal’s (D-CT) “Hide No Harm” bill. This bill would increase the ability of federal prosecutors to hold corporate officers criminally accountable when they knowingly conceal serious dangers that lead to consumer or worker deaths or injuries.
The bill was penned in response to the General Motors recall scandal, in which it was found that GM had knowingly sold vehicles with an ignition switch defect linked to 124 deaths. A congressional committee determined that GM officers knew about these defects as early as 2001. Instead of punishing the company officials responsible, however, the U.S. Department of Justice agreed to settle the criminal charges via a “deferred prosecution agreement,” which carries a fine, but no criminal charges for any individual GM corporate officers and no explicit admission of criminal culpability from GM.
Other notable examples include Merck’s withholding information on the risks of arthiritis drug Vioxx, which lead to 139,000 heart attacks, and Simplicity Cribs’ continued selling of defective cribs, leading to the deaths of 11 babies and many injuries.
Hide No Harm would give prosecutors the tools they need to bring criminal charges against the corporate officials who purposefully hide information on dangerous products. As the prosecutor in the GM case noted, “there are gaps in the law.” In a letter to Senators, the coalition pointed out that Hide No Harm would fill those gaps.
“This bill will provide an important deterrent to companies and their executives who knowingly sell and distribute unsafe products to consumers. The consequences to consumers can be dire while the consequences for companies may be negligible. This legislation seeks to ensure that the consequences of selling an unsafe product are significant,” said CFA Legislative Director Rachel Weintraub.
Senate Urged to Reject the Misnamed Safe and Accurate Food Labeling Act
CFA, along with a variety of consumer, environmental, and food safety groups, wrote to members of Congress earlier this month urging them to reject the improperly-named “Safe and Accurate Food Labeling Act of 2015” (H.R. 1599).
“While nine of out ten American consumers say they want the right to know what’s in their food, some members of Congress have sought to pass legislation preempting state labeling laws that provide consumers with accurate information about their food,” said CFA Director of Food Policy Thomas Gremillion. “H.R. 1599 is one such bill. It is an attack on consumer choice, as well as state efforts to protect human health and the environment.”
“This legislation would deny consumers the right to know what it is in their food and how it is grown,” the groups wrote in a letter to the Senate. It would generally preempt state laws that require disclosure not only of genetically modified organisms (GMOs) in food, but also state laws ensuring that consumers are not misled by deceptive “natural” claims on foods, including laws having nothing to do with GMOs.
Report Finds Funeral Homes Fail to Disclose Prices that Vary Widely
Funeral costs vary widely and most funeral homes fail to disclose those costs adequately, according to a survey report released last week by CFA and the Funeral Consumers Alliance (FCA). Looking at a representative sample of 150 funeral homes from ten different regions of the country, the survey found, for example, that the cost of a full-service funeral can range from $2,580 to $13,800.
“The huge price ranges for identical funeral services within individual areas indicate that these markets lack effective competition,” noted CFA Executive Director Stephen Brobeck. “The lack of price competition is unfortunate given the relatively high cost of funeral services and the reluctance of many bereaved consumers to comparison shop for these services.”
Of the funeral homes surveyed, only 38 (25%) fully disclosed prices on their websites, while 24 (16%) failed to fully disclose prices both on their website and in response to an email and a phone call. In 1984 the Federal Trade Commission (FTC) issued the Funeral Rule, amended it in 1994, which requires funeral homes to provide price information over the phone or a price list to those visiting the home. It does not require disclosure on the websites of funeral homes.
“The FTC needs to require funeral homes to disclose prices clearly and completely on their websites,” said FCA Executive Director Josh Slocum. “This disclosure will greatly increase consumer search for price information. It will also allow journalists, consumer information services, and consumer groups to much more easily research, compare, and report on prices.”