Diana Britton | Apr 04, 2017
The long-awaited 60-day delay to the Department of Labor’s fiduciary rule was made public late Tuesday.
A final rule delaying the Department of Labor’s fiduciary rule by 60 days was made public Tuesday evening. It will be published in the Federal Register Friday, April 7.
Read the full rule
The applicability date of the fiduciary rule, originally scheduled for April 10, has been pushed back to June 9 with a transition period for exemptions to the rule to run from June 9 through Jan. 1, 2018.
"The Department acknowledges that it is not likely to complete its required examination of the fiduciary rule by June 9," said Investment Company Institute President and CEO Paul Schott Stevens, in a statement. "If the DOL does not act by June 9 — either to make such a determination, or to further delay the applicability of the rule and any condition of its related exemptions — it risks creating significant market disruptions that will reduce retirement savers’ access to retirement products, services and related financial information and advice."
The department said it received some 193,000 comment letters on the proposal, 178,000 of which opposed any delay of the fiduciary rule. By contrast, some 15,000 supported pushing back the applicability by 60 days or more, with some asking for up to a year or more, or repeal of the rule altogether.
The delay is meant to give the department time to collect and consider information related to issues raised in President Donald Trump’s memorandum. Brokerage industry advocacy groups continue to push for outright repeal of the rule. In February, a U.S. federal court judge in Texas upheld the DOL fiduciary rule in a lawsuit challenging it. The nine plaintiffs, including the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association (SIFMA), the Financial Services Institute, Financial Services Roundtable, and Insured Retirement Institute filed an appeal in the U.S. Court of Appeals for the Fifth Circuit. The plaintiffs also sought an emergency stay on the April 10 applicability date; the Texas judge denied that motion.
"We are confident the DOL will find that the fiduciary rule is inconsistent with the administration’s goal 'to empower Americans to make their own financial decisions, to facilitate their ability to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, such as buying a home and paying for college, and to withstand unexpected financial emergencies,'" said the Financial Services Institute, in a statement.
Diana Britton | Mar 11, 2017
In a field assistance bulletin posted Friday night, the Department of Labor announced a temporary enforcement policy meant to avoid confusion over a proposal to delay its fiduciary rule.
On March 2, the DOL proposed a rule that would delay the fiduciary rule implementation date (April 10) by 60 days. That will give the agency time to collect and consider information related to issues raised in President Donald Trump’s memorandum on the rule. The public has until March 17 to comment on the proposal, and, if passed, the 60 day-delay would begin on the publication date of a final rule. But April 10 is fast-approaching, and it’s unknown whether that the department will finalize the delay by then.
“Although the Department intends to issue a decision on the March 2 proposal in advance of the April 10 applicability date, financial services institutions have expressed concern about investor confusion and other marketplace disruption based on uncertainty about whether a final rule implementing any delay will be published before April 10, whether there may be a ‘gap’ period during which the fiduciary duty rule becomes applicable before a delay is published after April 10, or whether the Department may decide either before or after April 10 not to issue a delay based on its evaluation of the public comments,” writes John J. Canary, director of regulations and interpretations, in the bulletin.
In the first part of the temporary policy, the department says that even if April 10 comes around and a delay hasn’t been finalized, they will not pursue enforcement actions against advisors or financial institutions who fail to satisfy the conditions of the rule or prohibited transaction exemptions. If an advisor fails to provide a client with a disclosure document, for example, they won’t be subject to disciplinary action.
Secondly, if the DOL decides not to issue a delay and it is past April 10, the department will not pursue enforcement action for violations of the rule “within a reasonable period after the publication of a decision not to delay the April 10 applicability date.” And if the department makes a decision on proposed delay and that causes more confusion, the agency will consider additional temporary relief, the bulletin said.
“It has been the Department’s longstanding commitment to provide compliance assistance to employers, plan sponsors, plan fiduciaries, employee benefit plan officials, and financial services and other service providers so that the fiduciary duty rule and exemptions are implemented in an efficient and effective manner.”