The U.S. Department of Labor (DOL) has decided that it will not delay the implementation of its fiduciary duty rule, which was thrown in limbo earlier this year by the new U.S. administration, any further.
The new rule, which imposes a fiduciary duty for retirement advice, will take effect on June 9, the DOL has decided. The rule was slated to take effect in April, but the Trump administration ordered that the DOL should delay implementation and reconsider its impact on the investment industry.
“[O]n June 9, investment advice providers to retirement savers will become fiduciaries, and the ‘impartial conduct standards’ will become requirements of the exemptions,” the DOL says in new guidance on the implementation of the rule, which indicates that the government will delay enforcement of the rule until Jan. 1, 2018.
The DOL says that it continues to analyze the issues raised in the Trump administration’s order to reconsider the rule — and that it’s possible the rule will face further changes. The DOL is also seeking additional input on specific ideas for possible new exemptions, or regulatory changes.
U.S consumer groups are expressing support for the decision to go ahead with the rule, but remain concerned about possible future changes to its provisions.
“We applaud Secretary [Alexander] Acosta for recognizing that respect for the rule of law demands that implementation of the rule be allowed to go forward without further delay,” says Micah Hauptman, financial services counsel to the Consumer Federation of America (CFA), in a statement.
“Americans have already clearly indicated that they believe all financial professionals should have to act in their customers’ best interests,” adds Barbara Roper, director of investor protection with the CFA, in a statement. “If Secretary Acosta truly respects the will of the people, he will stand up to the industry lobbyists who want a fiduciary standard in name only, and he will proceed with implementation of a rule that puts real teeth into the best interest standard by making it legally enforceable and by reining in practices that encourage and reward advice that is not in customers’ best interests. That is what Americans saving for retirement expect and deserve.”
However, the U.S. financial services sector remains hopeful that the DOL will alter the rule significantly.
“While we are disappointed that the [DOL] has chosen not to further delay the rule until the Department has completed a review of the entire rule’s impact on investors, we appreciate Secretary Acosta’s recognition of the rule’s negative impact and his desire to seek public input,” says Kenneth Bentsen Jr., president and CEO of the U.S. Securities and Financial Markets Association (SIFMA), in a statement.
“In anticipation of the rule taking effect, SIFMA’s members have been working for the past eighteen months to develop the systems and processes to ensure compliance,” he adds. “We hope that upon the Department’s completion of its wholesale rule review, they will conclude, as we believe the evidence clearly shows, that dramatic and fundamental changes are appropriate and necessary.”
Photo copyright: surangaw/123RF