Compliance

PSNC 2017: An Inside View of the DOL

The Department of Labor is still looking for ways to streamline and improve its new fiduciary rule, even though most provisions are now in effect.

By Rebecca Moore editors@plansponsor.com | June 12, 2017
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The Department of Labor (DOL)’s fiduciary rule, now in effect, is still likely not the final rule.

That’s according to Timothy Hauser, deputy assistant secretary for program operations of the DOL’s Employee Benefits Security Administration (EBSA), who spoke to attendees of the 2017 PLANSPONSOR National Conference, in Washington, D.C.

Hauser noted that EBSA is working on many initiatives, but he chose to spend his time speaking about the DOL rule because “that’s what everyone cares about.” The rule went into effect at the stroke of midnight the night of June 9. Hauser said that was intentionally to give advisers, broker/dealers (B/Ds) and other providers the weekend to make sure system changes were operable.

In the version of the rule now in effect, Hauser said, exemptions will be applicable—i.e., the best interest contract (BIC) exemption and the prohibited transaction (PT) exemption. The only additional requirements are prudence and loyalty, which means not charging unreasonable compensation and not being misleading in communications.

Hauser said the DOL embarked on this initiative because it felt it needed to revisit the 1975 rule, in view of market changes. “The five-part test in that rule meant many fewer people were fiduciaries than the statute suggested, so we went back to a broader definition,” he told attendees.

NEXT: The need for rule changes

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