DC Industry Providers Voice Fiduciary Rule Frustration

The DOL is still seeking information from DC industry providers and stakeholders regarding potential new and amended administrative class exemptions from the prohibited transaction provisions of ERISA. 

By John Manganaro | July 24, 2017
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Friday July 21st marked 15 days since the publication of a Department of Labor (DOL) request for information pertaining to its ongoing expansion and strengthening of the fiduciary standard under the Employee Retirement Income Security Act (ERISA).

Galling some industry providers, the first portion of the RFI only allowed for a 15-day comment period. The short comment period, as laid out in the text of the RFI, applied to Question 1, relating strictly to the idea of delaying the January 1, 2018, applicability date of certain provisions of the expanded fiduciary rule.

The agency’s wider RFI seeks input regarding potential new and amended administrative class exemptions from the prohibited transaction provisions of ERISA and the revenue code that were published in conjunction with the fiduciary rule expansion. Commentary on these matters is due within 30 days—on or before August 7, 2017. Among other considerations, the DOL seems to be curious how recent product development of “clean shares” and zero-revenue sharing investment approaches may impact the fiduciary landscape.

DOL officials have publically acknowledged that a “number of stakeholders … have requested a longer period in order to gather evidence and respond with new information.” The department encourages commenters to submit responses within the initial timeframes to “ensure their consideration as part of an expeditious process.” Nevertheless, the department’s examination is “ongoing, as is its consideration of possible proposals for new exemptions or revisions to the Fiduciary Rule and PTEs. Accordingly, if commenters submit thoughtful comments on questions 2-18 after August 7, 2017, the department will endeavor to consider those comments.”

Many of the public comments submitted so far regarding Question 1 clearly favor further delay in the January 1, 2018, applicability date for the more laborious requirements of the DOL rulemaking. By way of background, the fiduciary rule and PTEs had an original applicability date of this April 10, 2017.  However, a February memorandum from President Donald Trump directed the agency to analyze the rule’s likely impact on the access to retirement information and financial advice. In response, EBSA delayed the applicability date of the final rule to June 9 and asked for additional input, while also introducing transition provisions to simplify compliance efforts.

All told several thousand comments have been submitted throughout this lengthy process—and it’s clear that even more industry commentary is coming. For example, the U.S. Chamber of Commerce notes in its latest comment letter that the current transition fiduciary rule has been in effect for “only a short period,” and its full consequences—intended and unintended—are not immediately apparent.

“We are concerned that the truncated 30 day comment period for questions 2 through 18 will inhibit the ability of commenters to gather meaningful data that is responsive to the questions posed in the RFI,” the Chamber argues. “As such, we respectfully request that the DOL extend the comment period for these questions to 60 days so that commenters are afforded sufficient time to gather evidence and respond to the RFI. The requested comment period extension will allow the concerned public necessary time to observe the impacts of the rule more fully. The Chamber, and other interested observers, have already initiated data collection efforts to monitor and evaluate the implementation experience. These efforts will yield important new empirical evidence of the actual effects of the rule.”

NEXT: The argument for further delay