Calling the proposal a “bull-in-a-china-shop” approach, Bradford P. Campbell, now an attorney with Schiff Hardin LLP, told PLANSPONSOR: “The undisclosed conflicts DoL cites as justification for the proposal already are prohibited by the new 408(b)(2) regulation. It seems premature to turn a sweeping new class of service providers into ERISA fiduciaries when the new disclosure rules addressing the root of the problem haven’t even had a chance to go into effect yet.”
Campbell added that he thinks the cost impact on ESOPs of making appraisers fiduciaries will be significant, and that the proposal raises questions for broker-dealers and agents serving ERISA plans. “Non-fiduciary advice provided under the current rule would appear, under the proposal, to either make broker-dealers and agents ERISA fiduciaries, or require them to tell plan clients that their interests are ‘adverse’ because they are selling a product,” he stated.
The proposed rule more broadly defines the circumstances under which a person is considered to be a fiduciary by reason of giving investment advice to an employee benefit plan or a plan’s participants (see DoL Broadens Fiduciary Net).In a press call, Assistant Secretary of Labor for the EBSA Phyllis C. Borzi said the proposal changes the defenses some entities have used to get out of personal liability for faulty advice or conflicts of interest (see EBSA Answers Questions on Proposed Fiduciary Definition Change).