The Department of Labor (DOL) has announced that it is delaying the implementation of the fiduciary rule and related exemptions, including the Best Interest Contract (BIC) exemption, by 60 days. The DOL says it reached this decision in response to the February 3 memorandum that President Donald Trump issued, asking it to explore whether the new rule would hinder Americans from receiving retirement information and investment advice.
Thus, rather than going into effect on April 10, as it stands now, the DOL says, beginning on June 9, advisers will still have to adhere to impartial, best interest investment recommendations, charge no more than reasonable compensation for their services and refrain from making misleading statements.
On January 1, 2018, all of the exemptions’ conditions, including written disclosures, are scheduled to become fully applicable. In the interim, the DOL says, it will examine the fiduciary rule and decide whether to make or propose further changes to it. While it may end up making changes, the DOL says that advisers should still plan on complying with the BIC exemption and other requirements that are currently scheduled to go into effect on January 1, 2018.
The DOL is inviting the retirement and financial planning industries to comment on the issues raised by the presidential memorandum, saying, “The Department urges commenters to submit data, information and analyses responsive to these requests, so that it can complete its work pursuant to the memorandum as carefully, thoughtfully and expeditiously as possible.”
The Financial Services Institute (FSI) issued a statement commending the DOL for delaying implementation of the rule. The FSI said it “has supported a uniform fiduciary standard since 2009, before Dodd-Frank became law. As we have said for months, we are confident the administration understands our deep concerns for small investors, and today, once again, they showed they share these same concerns.”
The Insured Retirement Institute (IRI) also applauded the 60-day delay of the rule, maintaining that it “would significantly harm retirement savers by limiting access to financial guidance, reducing service provider choice and products and raising the cost of saving for retirement.” However, IRI President Cathy Weatherford said that the Institute is disappointed that the DOL did not delay all of the provisions of the new rule until January 1, 2018, and is hopeful that once the DOL reviews the industry’s comments, it will decide to delay all of the provisions of the rule until that time.