Bankers working in wealth management should expect major changes in regulations this year, according to Sarah “Sally” Miller, senior vice president, Center for Trust and Investments at the American Bankers Association in Washington.

“Your world is going to be different this time next year,” Ms Miller said in an address at the ABA’s annual Wealth Management and Trust conference in Phoenix.

“We’re going to get more regulation, and if you thought you had regulators joined (with you) at the hip now, there will be even more next year," Ms Miller said.

Most of the new regulation would come from legislation now being debated in Congress, Ms Miller said, particularly the regulatory restructuring bills in the House and the Senate, and the proposed Consumer Financial Protection Agency, which would have jurisdiction over wealth management.

The ABA is “very, very concerned, about the new Consumer Financial Protection Agency coming in as another regulator,” Ms Miller said. “It could impact the delivery of our fiduciary products and services,” she said.

Pending legislation that will restructure rules about fiduciary standards, hedge fund registration and custody of advisor assets could have especially far-reaching consequences, Ms Miller said.

If broker-dealers lose their exemption from being held to the same fiduciary standards as registered investment advisors, banks would face a serious “messaging” challenge, she told the attendees.

“The question would be how do you distinguish the value-added proposition of the bank’s trust or wealth management department and market your products and services when the broker-dealer down the street can market themselves as a fiduciary?” Ms Miller explained in an interview with Family Wealth Report.

Proposed regulation about custody of advisor assets stemming from the Bernard Madoff scandal also raises questions for banks.

“Will it impact the ability of a bank’s trust department to use the specialized expertise of affiliated advisors?” Ms Miller said.

In addition, banks and family offices would be affected by legislation which would require hedge funds and other private pools of capital to register with the SEC if they have 15 clients or more.

“We have to watch this going forward,” Ms Miller told the assembled bankers.

While the outcome of the ongoing bi-partisan negotiations to finalize financial regulatory legislation in Congress is far from certain, she said, there is no doubt there will be significant change.

“I know I’m a bummer,” Ms Miller told the glum attendees at one point.