WASHINGTON (Reuters) – The financial industry wants the U.S. Securities and Exchange Commission to hold off on parts of a new rule requiring brokers to disclose potential conflicts of interest, citing disruptions caused by the coronavirus, four people with knowledge of the discussions said.

FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo

The so-called Regulation Best Interest rule is one of several the industry has been lobbying to delay or suspend as it struggles with staff working from home, volatile markets, and a flood of customer queries due to the pandemic. A delay would help free-up much-needed resources, the people said.

One of the people with knowledge of the lobbying efforts, Daren Domina, an investment management partner at corporate law firm Haynes and Boone, said large brokers are still working to comply with the rule, albeit on a slower pace, while smaller brokers have made scant progress.

“An extension applicable to all firms though would be the fairest result,” Domina said.

The three other sources asked not to be named because they weren’t authorized to speak publicly on the issue.

“Reg BI” requires brokers to disclose potential conflicts of interest, such as fees and the commissions they earn, when giving financial advice.

It was due to go into effect on June 30, but industry is pushing for at least part of it to be delayed until Sept. 30.

Specifically, compliance teams have been struggling with the rule’s Client Relationship Summary form, which outlines the specific fees, costs, conflicts and standards of conduct that apply to the different types of advice that brokers and advisors offer to retail clients, the people said.

In a statement on Thursday, SEC Chair Jay Clayton said the June 30 deadline remained “appropriate” but indicated there could be flexibility.

“I expect that the Commission and the staff will take the firm-specific effects of such unforeseen circumstances (and related operational constraints and resource needs) into account in our examination and enforcement efforts,” he said.

With stay-at-home orders related to the coronavirus health crisis affecting so many staff as well as clients, compliance teams have been struggling with the coding and programming needed to bring the form online, the people said.

The industry is also seeking guidance from the SEC that would help them more easily comply with the rule, the people said. The SEC has agreed to meet with industry associations to discuss the issue, but a date has not yet been set, two of the people said.

Reg BI was widely seen as a win for Wall Street, which successfully fought off a more onerous investment advice proposal by the Department of Labor. Most notably, the SEC’s rule still allows brokers to recommend financial products that benefit them, provided they disclose the conflict.

In September 2019, seven U.S. states and the District of Columbia sued to block the measures.

Consumer groups who have criticized the rule for being too weak said that while they’re not normally sympathetic to industry requests, they were not against a delay.

“We don’t think Reg BI offers substantial new protections for investors, so we don’t see a delay as denying investors of critical new protections,” Barbara Roper, director of investor protection at the Washington-based Consumer Federation of America, told Reuters.

Reporting by Katanga Johnson; Editing by Michelle Price and Sonya Hepinstall

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