IBA WEST SUBMITS TESTIMONY OPPOSING REVISED PROPOSED ‘BROKER FIDUCIARY DUTIES’ REGULATIONS:

IBA West submitted written testimony expressing strong opposition to the revised “Broker Fiduciary Duties” regulations proposed by California Insurance Commissioner John Garamendi. “While these regulations are less onerous in their revised form, they are still nonetheless an attempt by the insurance commissioner to usurp the powers of the California Legislature to enact sweeping new rules of general application upon all licensees subject to his jurisdiction, and to escape judicial review of his 790.06 enforcement discretion,” wrote Steve Young, IBA West senior vice president and general counsel in a letter to the department. “If this regulation was actually adopted as drafted, there would be no need for the California Legislature ever to consider another piece of insurance legislation,” Young said. “Consequently, we believe the regulation as drafted not only lacks statutory authority, but is also unconstitutional on the ground that it violates the separation of powers distinguishing the Executive Branch of government from the Legislative and Judicial branches,” Young wrote. “The Commissioner has failed to justify any necessity whatsoever for these regulations; he mis-cites provisions of the California Insurance Code; he has no regulatory authority to create affirmative and radically new legal duties upon brokers and agents; and his revised regulations, as drafted, are unclear, ambiguous, and unconstitutional. For all these reasons, we respectfully urge the Commissioner not to adopt the proposed regulations.”