Securities regulators on Friday called for a new uniform fiduciary standard for broker-dealers and investment advisers that would require them to put retail customers ahead of their own financial interests.

The recommendations, laid out by the Securities and Exchange Commission in a study reviewed by Reuters late on Friday, would drastically alter the landscape for broker-dealers who under current laws are only required to recommend products that are suitable to mom-and-pop investors.

It could also potentially mean changes for investment advisers if the SEC opts to replace their fiduciary standard with a new one, although the study says it would be no less stringent than what they face today.

Under today's standard, advisers must act in a client's best interest. The study was required under the Dodd-Frank financial law, and its findings are likely to help shape future rule-making at the agency.

SEC Chairman Mary Schapiro has long called for harmonizing regulations between brokers and advisers who offer retail customers advice, saying investors may not know the difference between those acting in their best interest and those who are just peddling products.

But both Republican commissioners issued a harsh critique of the study on Friday, saying it failed to provide evidence that investors are being systemically harmed or disadvantaged. They also questioned if a uniform standard would eliminate any investor confusion.

Because of our concerns, we oppose the study's release to Congress as drafted, wrote Commissioners Kathleen Casey and Troy Paredes in a statement reviewed by Reuters.

Before the commission proposes rules in this area, more rigorous analysis - rooted in economics and data - is needed to avoid unintended consequences.

The big issue the study seeks to address is how to handle conflicts of interest, particularly for brokers who wear two hats by both offering advice and selling products.

They may, for instance, get commissions if they offer certain products. Or they may trade with a client on a principal basis.

The study seeks to balance investor protection with the uniform standard while at the same time being flexible enough to accommodate different business models.

In some instances, it suggests new rules are in order to prohibit certain conflicts. In other cases, conflicts could be addressed through clear disclosures for investors.

Such disclosures could include documents containing key information on a firm's services and fees. It also contemplates rules requiring general disclosures of conflicts as well as disclosures that would be required at the time the firm provides advice.

The brokerage industry has supported a uniform fiduciary standard as long as it is clearly spelled out by rule-writing and does not impede firms from offering a wide range of products to customers.

But investment advisers have said they believe brokers offering advice to retail customers should face the same stringent fiduciary standards they do today.

Some have raised concerns the SEC will adopt a lesser standard across both industries that will make it easy for brokers to simply skirt their responsibilities to act in a client's best interest.

The study says it aims to strike a balance between making sure investors don't have to parse through legal distinctions while also ensuring they continue to have access to various fee structures, account options and types of advice.

Ira Hammerman, the general counsel at the Securities and Financial Markets Association, said late Friday that the group embraces the notion of having this uniform fiduciary standard.

Although he was still reviewing the study and also hopes for more SEC guidance, Hammerman added that the study appeared to be consistent with what we at Sifma have been calling for.

The SEC had not yet officially released the study on Friday, but a copy was reviewed by Reuters. The study also lays out other ways to harmonize rules for brokers and advisers in areas such as advertising, the use of finders and solicitors and licensing and registration requirements.

(Additional reporting by Charles Abbott; Editing by Nick Macfie)

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