The Department of Labor is “very interested” in finalizing and implementing its proposed fiduciary rule before President Barack Obama leaves office, but it may need to provide a compliance transition period so financial advisers can ease into the new framework, a former DOL official said.
The agency is making “an honest effort” to absorb and internally discuss the comments it's received both in writing and during a marathon hearing, said Allison E. Wielobob, counsel at Sutherland Asbill & Brennan LLP in Washington. Wielobob came to Sutherland in June after a career at the DOL's Employee Benefits Security Administration. She spoke at an American Law Institute Continuing Legal Education conference Sept. 11 in Washington.
Wielobob said she's heard “cynical” statements from opponents of the proposal that it would be finalized as is. But based on her experience working on other DOL rules, she said, the rule isn't a fait accompli, and changes will be made.
Speaker Says Subregulatory Guidance Likely
Some of them may include providing a “compliance assistance period” to give advisers flexibility in implementing the rule. The proposal would require an eight-month implementation period, but Wielobob said she expects the DOL to issue subregulatory guidance, such as through frequently asked questions and field assistance bulletins.
The disclosure requirements at the heart of the proposal, the best interest contract prohibited transaction exemption, may also get another look, Wielobob said. The DOL already has recognized that the disclosure rules it finalized under 29 C.F.R.§ § 408(b)(2) and 404(a)(5) were a “heavy lift” for plan sponsors. Given that, Wielobob said, she's “hoping that someone smart will figure out a way to mesh these things and make it a little easier to comply with at least the disclosure requirements parts” of the conflict-of-interest rule, she said.
Among the areas that might not change, but that several commenters have requested, is mandatory arbitration. “I don't think that that's going to be eliminated,” she said, although she said DOL officials at the hearings did seem sympathetic to the commenters' concerns.
The DOL's work on the proposal could be hindered if Congress fails to meet its deadline on a federal budget bill, which would result in a government shutdown, Wielobob said.
The House Appropriations Committee approved a measure in June that would cut DOL spending and block a number of related initiatives, such as the proposed conflict-of-interest rule.
Absent a deal or movement on the appropriations bills, Congress probably will have to use a continuing resolution to keep agencies funded when the new fiscal year begins.
Excerpted from a story that ran in Pension & Benefits Daily (09/14/2015).
Stay on top of the latest industry trends and news coverage with a free trial to the Benefits Practice Resource Center.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)