DOL proposes to extend implementation of fiduciary rule by 60 days
- Author: Essie Rivera Mar 04, 2017,
Mar 04, 2017, 0:22
President Trump's order on February 3 that the agency review the fiduciary rule has confused brokerage firms, some of whom fear legal liability from violating the rule's tight exemptive relief if they offer commission retirement accounts that are product-oriented. There is not even a DOL secretary yet, and indeed, even if the 15-day comment period stands and the DOL delays the fiduciary rule's initial implementation for two months, a June applicability date still presents a significant challenge for firms that have not fully prepared themselves for compliance. There will also be a 45-day window to submit comments or information related to other aspects of Trump's memorandum. It was slated to take effect on April 10, but Trump asked the department to review the rule one more time for its impact on investors.
"The extension would make it possible for the department to take additional steps (such as completing its examination, implementing any necessary additional extension (s), and proposing and implementing a revocation or revision of the rule) without the rule becoming applicable beforehand", according to the document.
The controversial rule would expand the definition of fiduciary.
Questions for consideration during the comment period include whether investment firms anticipate changes in consumer demand for investment advice and investment products, and whether some firms are moving to abandon or deemphasize the small individual retirement account investor or small plan market segments, it said. By delaying the rule, the Labor Department is buying more time to comply with the president's request to look into whether the rule harms consumers by limiting their investment options.
The Financial Services Roundtable, a lobbying group, issued a statement praising the delay. As a result, the new rule would require brokers and advisors to put their clients' best interests before their own profit.