The U.S. Department of Labor (DOL) is revising its controversial fiduciary rule to harmonize with the U.S. Securities and Exchange Commission’s (SEC) new best interest standard for brokers.

The DOL announced that it has proposed revisions to its fiduciary rule, which was struck down in 2018 amid court challenges from the U.S. investment industry.

A proposed new exemption in the rule is based on an existing temporary policy adopted after a U.S. court vacated the original rules.

The new requirements are designed to align with the SEC’s rule, known as Regulation Best Interest (Reg BI), that takes effect June 30.

U.S. industry trade group the Securities Industry and Financial Markets Association (SIFMA), which favoured the SEC’s best interest standard over the DOL’s original, more stringent fiduciary standard, applauded the proposed new requirements.

In a statement, SIFMA president and CEO Kenneth Bentsen, Jr., said that the DOL’s proposal will “preserve investor choice, which allows for many different investment advice and education options.”

Bentsen also noted that the DOL rule would be consistent with the SEC’s Reg BI, which, he said, “imposes a materially heightened standard of conduct for broker-dealers when serving retail clients.”

SIFMA said that Reg BI represents a shift away from the traditional suitability standard to a best interest standard, and also recognizes that disclosure alone isn’t enough to deal with conflicts of interest.

However, U.S. consumer advocates remain strongly critical of the SEC rule.

“Reg BI combines a vague and undefined ‘best interest’ standard with minimal restrictions on incentives that encourage and reward harmful advice. It’s a toxic combination,” said Barbara Roper, director of investor protection at the Consumer Federation of America (CFA), in a statement.

“Investors and retirement savers deserve real protections, not this sham, which was drafted to preserve industry profits, not protect investors,” Roper said.

In particular, Roper noted that the SEC declined to clarify the meaning of “best interest.”

“As a result, it’s not clear the new standard is any higher than the old suitability standard that Reg BI replaces,” she said, adding that this does little to curb industry conflicts of interest.

Yet, another industry trade group, the Financial Services Institute (FSI), which helped challenge the original DOL fiduciary rule, applauded the SEC’s approach.

“Reg BI provides a workable and business model-neutral framework for serving clients’ best interests while also preserving access to high-quality, professional financial guidance,” said FSI president and CEO Dale Brown in a statement.