A prominent association representing RIAs says there are major flaws with the testing of the Customer Relationship Summary that’s part of the SEC’s proposed Regulation Best Interest.

The Investment Adviser Association says the testing conducted for the SEC by the RAND Corporation was “substantially flawed” because it didn’t test whether participants actually understood the form, known as Form CRS, according to a comment letter the IAA sent to the SEC this week.

Rather, RAND allegedly tested only for the version of the form that applies to dual registrants and didn’t test the form applicable to standalone broker-dealers or investment advisors, the IAA claims. In addition, the test didn’t examine any alternative methods or types of disclosure, according to the letter.

RAND conducted an online survey of more than 1,800 individuals and followed some of them up with interviews in Denver and Pittsburgh, as reported.

RAND found that close to 90% of the survey respondents believe Form CRS in its current form would help them make better-informed decisions about investment services. The interviews, however, revealed that the form left many participants confused about differences between different account types and financial professionals.

Despite its flaws, however, the test resulted in “valuable insights” into how the form could be improved, the IAA says.

Namely, the test suggests that the form should be simplified in a way that would improve investors’ understanding and reduce confusion, according to the comment letter. And the IAA recommends that the form should be streamlined so that it only includes critical aspects of what brokers and advisors offer in terms of services and types of relationships.

The SEC should also leverage the existing “robust disclosures” that investment advisors already provide in their Forms ADV, according to the letter. To help the SEC devise a better form, the IAA is offering the regulator several alternative examples of relationship summaries, the group says.

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“We commend the SEC for following through on its commitment to conduct investor testing and for publishing the results for public comment, as we had requested,” IAA president and CEO Karen Barr says in a press release. “The results underscore the need for significant changes to the proposed form to ensure it works as needed.”