Legislators have expressed frustration with how slowly the SEC has moved toward proposing a rule that would raise investment advice standards while the Department of Labor speeds along.

In an appearance before a House Financial Services subcommittee, SEC Division of Investment Management Director David Grim was pressed about the timing of a potential rule. Grim denied to give a timetable but noted that his staff “has done extensive analysis” toward developing a proposal.

When asked when the analysis would go to the commission, Grim replied, “As soon as it’s ready.”

Rep. French Hill, R-Ark., called Grim’s response “ridiculous.” Hill, who is a critic of the Labor Department rule, is angered that the Department has preempted the SEC on the investment advice issue by proposing a rule that would require a best-interests standard on 401(k) and individual retirement accounts. Hill and other critics of the Labor Department rule believe the Department should wait until the SEC acts.

Proponents of the Labor Department’s rule claim opponents want the Department to wait on the SEC because its slow-go approach would effectively kill the Labor Department’s measure. But those who want the SEC to act first say that is more logical because an SEC regulation would apply to all securities investment accounts, not just those for retirement. The Labor Department rule also would cover insurance and other investments.

“It’s absurd to have two sets of rules,” said Rep. Brad Sherman, D-Calif. “It ought to be the same rule. The stricter rule ought to apply to non-IRA accounts.”

Critics of the Labor Department rule claim it will drastically increase liability and regulatory costs for brokers and make giving and receiving investment advice more expensive. Supporters argue it will curb incentives that encourage financial advisers to put clients into high-fee products that erode retirement savings.

The Labor Department rule is expected to be finalized in the first quarter of next year so it is in place before the end of the Obama administration.

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