AICPA Chairman Robert R. Harris told a congressional committee on Sept. 23 that the Institute supports stronger protections for financial consumers, but cautioned that one bill under consideration is overly broad and could burden CPAs with excessive regulation.
Testifying before the House Small Business Committee, Harris acknowledged gaps in the current regulatory regime in supervision and enforcement with respect to lenders. He said the Institute supports efforts to fix those problems.
However, Harris sounded a note of caution on the proposed Consumer Financial Protection Act (CFPA) introduced in July. He said the act “broadly defines financial activity to include acting as a financial adviser,” which includes tax return preparation, tax-planning advice, financial planning advice, general advice to small businesses and family businesses, tax audit representation, estate and retirement planning, forensic accounting and valuations, among other things.
Subjecting CPAs and firms performing such services to CFPA regulation “will unnecessarily increase costs to consumers without adding corresponding benefits,” Harris said. “With regard to CPAs, the goals of the CFPA are already being met under the existing regulatory structure.”
Harris said CPAs should not be exempt from the bill’s regulation when acting outside of the provision of customary and usual services to their clients. The AICPA supports additional oversight of financial products, such as refund anticipation loans, he added.
The CFPA, HR 3126, was introduced July 8 by House Financial Services Committee Chairman Barney Frank, D-Mass., in response to the economic crisis and the Obama administration’s regulatory reform plan. It has faced criticism from business and professional organizations primarily because of the scope of the legislation and uncertainty as to whether a new standalone consumer protection agency is necessary or whether enhancing the powers of existing regulators could better accomplish the same goal of consumer protection.
“The AICPA supports the goal of enhanced financial consumer protection, but we believe it is critical to consider the plan’s effect on small business to ensure that it does not stifle the innovation, creativity and inventiveness of the American entrepreneur that has driven our economic engine,” Harris told the committee. He also said the Institute is concerned about the “redundant regulation” that CPAs and firms—already overseen by the IRS, the Treasury Department, state boards of accountancy and ethical standards—potentially could face under the act for certain services they perform in their roles as financial advisers.
A copy of Harris’ testimony is available at tinyurl.com/yef68em.