DOL: We Won’t Enforce Fiduciary Rule While Delay is Undecided

By John Hilton – InsuranceNewsNet – March 13, 2017

The Department of Labor issued a bulletin Friday alerting the financial services industry that it will not pursue strong enforcement of its fiduciary rule in the short term.

 The bulletin was issued to clear up confusing over the rapidly approaching April 10 applicability date. That date may be delayed by 60 days if a DOL rule is published in time.

 “Financial services institutions have expressed concern about investor confusion and other marketplace disruption based on uncertainty about whether a final rule implementing any delay will be published before April 10, whether there may be a ‘gap’ period during which the fiduciary duty rule becomes applicable before a delay is published after April 10,” the bulletin reads.

 The DOL’s “temporary enforcement policy” is as follows:

A. In the event the Department issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the Department will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the rule or the PTEs during the “gap” period.

B. In the event the Department decides not to issue a delay in the fiduciary duty rule and related PTEs, the Department will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date of the rule, failed to satisfy conditions of the rule or the PTEs provided that the adviser or financial institution satisfies the applicable conditions of the rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a reasonable period after the publication of a decision not to delay the April 10 applicability date.

 The DOL added that it will consider additional relief “as necessary,” but added that the bulletin “should not be read as expressing any view on any decision regarding a final rule on the (delay).”

President Donald J. Trump ordered the department to seek a delay in a Feb. 3 memorandum. Trump’s memo tasked the DOL with studying whether the rule will deprive Americans of retirement advice and/or add undo cost burdens.

Republicans control the White House, as well as both chambers of Congress, and are intent on killing the Obama administration regulation. The fiduciary rule requires anyone selling financial products with retirement dollars to adhere to a strict best-interest standard, or face class-action liability.

https://www.insurancenewsnet.com/innarticle/dol-wont-enforce-fiduciary-rule-delay-undecided

By MARIANNE LEVINE and PATRICK TEMPLE-WEST

http://www.politico.com

 03/01/17 02:18 PM EST

Labor Department proposes to halt fiduciary rule, in win for brokers

The Labor Department on Wednesday took the first step toward handing financial companies a victory in their effort to eliminate a controversial conflict-of-interest rule for brokers who offer retirement investing advice to customers.

The department proposed to delay the so-called fiduciary rule, which the Obama administration finalized last year after a fierce battle with the financial industry. The rule is scheduled to begin on April 10, but the proposal would delay that until June 9.

The move stems from a memo that President Donald Trump issued on Feb. 3 asking the agency to reevaluate the rule and defer its implementation.

The fiduciary rule would require financial brokers to consider their clients’ best interest — not their own commissions — when offering retirement investing advice. Insurance companies, mutual funds and brokerages have fought the rule because it will limit their sales practices. Lobbyists for these businesses praised the proposed delay.

Though the delay was expected after Trump’s memo, the 60-day period was shorter than what many lobbyists wanted.

“It’s certainly not what a lot of people in industry asked for,” said Michael Kreps, a principal at Groom Law Group. “We’re not sure why the [Trump] administration, the Department of Labor in consultation with OMB [Office of Management and Budget], why they landed on 60 days as opposed to a longer delay.”

Despite the brief delay, financial companies can still expect the Trump administration to ultimately rescind the fiduciary rule, said Jaret Seiberg, an analyst with Cowen & Co.

“This is about protecting the delay from a legal challenge,” Seiberg said in a research note. “A shorter delay leaves less time to challenge the delay and the overall magnitude of the cost of delay is less. As a result, it is a safer option for the Labor Department.”

In early June, the Labor Department is likely to issue another delay in conjunction with a plan to rescind much of the regulation, Seiberg said.

Republicans were quick to praise the move. Lamar Alexander (R-Tenn.), who chairs the Senate HELP Committee, said the delay “is a good first step in reviewing and repealing the so-called fiduciary rule” and that “the rule should be withdrawn before it cripples low- and middle-income Tennesseans’ access to affordable retirement advice.”

Not all financial companies want the rule eliminated. Financial Engines Inc., a California-based company that offers retirement planning services, said in a Feb. 24 letter to the Labor Department that the fiduciary rule is “crucial” and “beneficial for investors.”

“The vast majority of investors are entirely unaware that these conflicts of interest even exist, and often end up with investments that have lower returns and higher fees,” Financial Engines said.