Those hoping the Department of Labor’s Fiduciary Rule would once again be delayed from scheduled June 9 implementation were caught off guard and “disappointed” after new Labor Secretary Alexander Acosta announced the rule will go into effect without further delay – albeit with lax enforcement this year as the rule remains under review.
The announcement was made in an op-ed penned by Acosta and posted Monday night on The Wall Street Journal website. Earlier this year the DOL moved to delay the original April 12 initial implementation by 60 days after President Trump’s executive memo called for a review of the controversial regulation.
Acosta said in the op-ed that the review is “ongoing,” but delaying the regulation a second time wouldn’t be consistent with the law and that the DOL had found no principled legal basis to change the June 9 date while they seek public input.
The Insured Retirement Institute (IRI) today issued a statement from IRI President and CEO Cathy Weatherford in response to the Department of Labor’s decision to not delay the entirety of the Fiduciary Rule:
“IRI remains committed to supporting a best interest standard for financial professionals; however, the Department of Labor’s Fiduciary Rule is already having harmful impacts on Americans planning for retirement. In comment letters sent by IRI and others to the Department, new information was provided demonstrating that as a result of the Fiduciary Rule, financial professionals will stop serving small account savers, orphaning these Americans from the financial help they need. This new information shows that savers who receive financial advice save nearly three times more than non-advised individuals. The new information also shows how a wide array of financial service providers are responding to the Rule’s new litigation risks by limiting the investment types and products they will recommend. Therefore, we are very disappointed that the entire Rule will not be further delayed so a full examination of the Rule can be conducted, as directed by President Trump, before it goes into effect.
We commend Secretary Acosta for his continuing commitment to seek and examine public comment on whether to revise or rescind the Rule and to collaborate with the SEC during this process. IRI looks forward to working the Department of Labor, the SEC and Congress to develop a best interest standard of care that enables all Americans to achieve a secure and dignified retirement.”
NAFA, the National Association for Fixed Annuities, issues a statement saying it is “very disappointed that Secretary Acosta did not delay the June 9th implementation deadline of the DOL Fiduciary Rule.” NAFA has remained strongly opposed to the June 9th implementation date of the Fiduciary Rule consistent with the analysis mandated by President Trump’s Executive Memo of February 3rd.
“NAFA continues to be concerned with the adverse consequences that will result to everyday Americans and the entire annuity industry once this harmful rules takes effect on June 9th. As shown in comment letters submitted to the DOL as part of its review of the rule, NAFA and other stakeholders have provided new information demonstrating the flaws of DOL’s prior regulatory impact analysis,” said Chip Anderson, Executive Director of NAFA. The statement concluded by saying “NAFA looks forward to meeting with the Department of Labor, Congress and other industry officials to review and hopefully rescind the rule.”
Two major provisions of the Fiduciary Rule will go into effect on June 9 – one that expands the definition of who is a fiduciary and another establishing impartial conduct standards.
The DOL also released guidance on its “Temporary Enforcement Policy on Fiduciary Duty Rule.” Per that bulletin:
During the phased implementation period ending on January 1, 2018, the Department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.
To the extent that circumstances surrounding the applicability date of the fiduciary duty rule and exemptions give rise to the need for other temporary relief, EBSA will consider taking such additional steps as necessary.
A new set of “Frequently Asked Questions” on Conflict of Interest related to the transition period was also released.
• Comments? Please visit this thread: DOL Fiduciary Update – 60-day delay proposed by DOL
• See also:
FINRA Chair: Even if Trump repeals Fiduciary Rule, it has already reshaped industry