Compliance

No More Delays for DOL Fiduciary Rule

Providers will have to begin complying with provisions of the new DOL fiduciary rule starting June 9, 2017. 

By John Manganaro editors@plansponsor.com | May 23, 2017
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All signs from the Department of Labor (DOL) suggest the fiduciary rule regulations adopted in the waning days of the Obama presidency will begin to take effect June 9, 2017, much to the surprise of a whole host of industry analysts, lobbyists and trade groups.

Regular readers of PLANSPONSOR will already know what a symbolic milestone this is, given the decade-long debate leading up to this point. Just in the last year the fiduciary rule’s future has seemingly flipped at least two or three times, starting with the election of Donald Trump and the bicameral Republican majority in the U.S. Congress. Given the new president’s and the GOP’s rhetorical stance towards government regulation of financial markets, it was naturally assumed that the fiduciary rule would be, by one mechanism or another, prevented from taking effect.

However, the full Congress has failed as yet to pass any measures impacting the fiduciary rule implementation, and the new administration took four full months to fill the position of Labor Secretary. This left Alexander Acosta precious little time to begin the process of somehow removing or revising the rulemaking. Trump’s DOL managed to delay the rulemaking’s earliest compliance deadlines from April to June, but it apparently has given up trying to fully halt the implementation.

Of course, there is nothing stopping the administration from moving again on this issue after the first or subsequent implementation dates have passed, during the transition process. The idea is that a new administration cannot just arbitrarily toss out fairly crafted rulemaking installed by a predecessor, but it can implement a fairly crafted set of rules on its own that more or less have the same ultimate effect.  

Indeed, here is how a field assistance bulletin published by the DOL’s Employee Benefits Security Administration (EBSA) describes that possibility, citing President Trump’s February 3rd memorandum ordering the DOL to continue to work on the fiduciary rule: “The public comment period on questions raised in the Presidential Memorandum, and generally on questions of law and policy concerning the fiduciary duty rule and PTEs, closed on April 17, 2017. The Department is actively engaging in a careful analysis of the issues raised in the President’s Memorandum. It is possible, based on the results of the examination, that additional changes will be proposed to the fiduciary duty rule and PTEs.”

The DOL also “intends to issue a Request for Information (RFI) in the near future seeking additional public input on specific ideas for possible new exemptions or regulatory changes based on recent public comments and market developments. The Department is also aware that after the fiduciary duty rule and PTEs were issued firms have begun to develop new business models and innovative market products to mitigate conflicts of interest. The RFI will specifically ask for public comment on whether it is likely to take more time to implement these new approaches than what the Department envisioned when it set January 1, 2018, as the applicability date for full compliance with all of the exemptions’ conditions, and, if so, whether an additional delay in the January 1, 2018 applicability date would reduce burdens on financial services providers and benefit retirement investors by allowing for a smoother implementation of those market changes.”

NEXT: Compliance during the transition period 

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