She says their stories change depending on who they speak to.
Massachusetts Senator Elizabeth Warren believes insurers are talking out of both sides of their mouths.
In a letter to Securities and Exchange Commission Chair Mary Jo White on Thursday, Warren, a Democrat, requested that the SEC investigate financial service companies for misleading investors about the impact of a pending Department of Labor rule. The Conflict of Interest rule, which would require advisers overseeing retirement accounts to put their clients’ best interests above their own, is expected to go into effect as early as next week, according to the Wall Street Journal.
According to Warren, a number of executives at insurance companies, including Prudential Financial and Lincoln National Life Insurance, have complained that the new rule’s higher standard would jack up compliance costs and create significant headwinds for the industry. But at the same time, the executives told investors that the rule would pose no problem to the financial health of the company.
“Corporate interests have become accustomed to saying whatever they want about Washington policy debates, with little accountability when their predictions prove to be inaccurate,” Warren wrote in the letter. “But the information we have obtained raises questions about how, in this specific case, the companies could have knowingly provided such dramatically different public statements about the impact of the DOL Conflict of Interest Rule—in one example, saying almost simultaneously that the rule would be ‘unworkable’ and that the rule would not be ‘a significant hurdle’ —without misleading investors.”
In a statement to Fortune, Prudential spokesperson Scot Hoffman defended the company’s previous statements. “As we have said consistently, the Department of Labor fiduciary rule could have the unintended consequence of limiting client access to financial advice and retirement solutions,” he said. “We have a business mix and business strategies that enable us to navigate that potential disruption better than most of our competitors, but that does not lessen our concerns about unintended consequences for American households.”
A spokesperson for the Lincoln Financial Group, which Warren also named in her letter, said that the company’s comments to investors and the government don’t contradict each other. “We have consistently supported the DOL’s objective of making sure consumers receive financial advice that is in their best interests. In our comments to the DOL, we have requested modest changes to the proposed rule which would better allow consumers to have continued access to retirement products that offer guaranteed lifetime income. In our comments to investors, we have explained how we could respond to the rule in the event of a sales disruption as a result of consumers’ more limited access to these products.”