It looks like one of the major changes in regulation of financial services firms, that they act in their clients best interest, a so-called fiduciary responsibility, as opposed to the current standard of “industry standard” behavior, which basically says that the only crime is to get caught.

Well, Tim Johnson, no doubt still suffering from the effects of his stroke 3 years ago, has decided to kill the fiduciary requirement, and send the idea to the SEC for a “study”:

Lobbying by insurers and banks including Morgan Stanley may result in the elimination of a proposed new standard that would make retail brokers more accountable to their clients.

Tim Johnson, the South Dakota Democrat in line to become the next chairman of the Senate Banking Committee, is circulating a proposal that would drop the so-called fiduciary standard for brokers from the panel’s reform package, according to a copy obtained by Bloomberg News. Johnson instead proposes that the U.S. Securities and Exchange Commission conduct an 18- month study to see if there’s need for a new broker standard.

Consumer advocates have pushed for the fiduciary standard, arguing that investors are misled by the adviser title used by thousands of brokers. Investors have difficulty distinguishing between investment advisers and brokers, and most see their brokers as advisers, according to a 2008 Rand Corp. study commissioned by the SEC. Without the fiduciary requirement, brokers don’t have the same accountability for their advice as investment advisers and have more leeway to sell financial products created by their own firms instead of seeking the best investment for the customer.

Not only is this bad policy, it’s bad politics.

Make the Republicans vote against a law that says, “Financial advisers must act in their client’s best interests,” if you push it, people will understand it.