The largest professional association for financial planners sued the Securities and Exchange Commission Tuesday to force stock brokers to be held to the same standards as financial planners.

The Financial Planning Association (FPA) contends that stock brokers who act as financial planners should not be exempt from the fiduciary duties and disclosure rules required by the federal Investment Advisers Act, TheStreet.com reported.

"The SEC has given brokers a wholesale exemption from the Advisers Act that Congress never intended," said Barbara Roper of the Consumer Federation of America, which supports the lawsuit. "The recent mutual fund scandals provide ample evidence of the enormous gap between the advisory image brokers promote and the seamy reality of their conduct.”

Financial planners must place the client’s interest above their own, ensure that investments are suitable and provide complete disclosure about their services, pay and any conflicts of interest.

Stock brokers have not been required to follow those standards because the SEC in 1999 proposed that brokers operate under less-stringent Exchange Act rules, which allow brokers to forgo commissions and be paid for advisory services even though they aren’t investment advisers. The SEC sent the proposal out for comment, but never acted on it, promising no enforcement until it was finalized. That led brokers to act as if the rule is in effect, financial planners say.

"Clearly, consumers, financial planners and compliance professionals still do not know what the SEC meant under the rule proposal," said FPA President Elizabeth Jetton, in a prepared statement. "However, instead of attempting to define a difficult legal concept, we believe the public would be better served by requiring brokers to operate under the higher standards of investor protection afforded by the Advisers Act."

She said the FPA will argue in court that the SEC violated the intent of the federal Administrative Procedures Act by failing to complete its rulemaking process in a timely manner, and for misinterpreting its authority under the Advisers Act in crafting a new exemption.

"For nearly five years the SEC has permitted brokerage firms to comply with a rule that was never adopted,” Jetton said. “We believe that at a minimum, the SEC should comply with the rules under which federal regulations are adopted and to act promptly by withdrawing a poorly conceived regulation."