Congress Working to Dismantle DOL Fiduciary Proposal



Some members of Congress have been working to defeat or come up with alternatives for the Department of Labor's fiduciary proposal (RIN 1210-AB32), which would extend the Employee Retirement Income Security Act's conflict-of-interest requirements to brokers handling workers' retirement savings.

This is in addition to the Retail Investor Protection Act (H.R. 1090), passed in the House in late October (H.R. 1090) that would halt the proposal until after the Securities and Exchange Commission finalizes rules on standards of conduct for brokers and dealers. SEC Chairman Mary Jo White said Nov. 10 that the SEC is “full-out focused” on crafting a uniform fiduciary standard for broker-dealers, but it won't be a fast process.

House Bill: The Retirement Choice Protection Act of 2015 (H.R. 3922), introduced in the House on Nov. 4 by Rep. Mike Kelly (R-Pa.) and co-sponsored by Rep. Sam Johnson (R-Texas), would transfer DOL authority for oversight of individual retirement accounts to the Treasury Department. The bill also includes a “best interest standard for advice fiduciaries” to IRAs and retirement plans not subject to ERISA. Under the standard, advisers could make recommendations on a limited range of products, including proprietary products, so long as the adviser makes proper disclosures. The bill also would allow advisers to receive compensation that varies based on the transaction, services or products involved, also dependent on proper disclosures.

Listening Sessions: The House Appropriations Committee Republicans are planning as early as the week of Nov. 16 to hold “listening and member education sessions” on DOL funding legislation and four other appropriations bills that have yet to see a vote in the chamber. The committee approved a funding bill for the DOL, Department of Health and Human Services and related agencies (H.R. 3020) in June, but that measure hasn't seen a floor vote.  Lawmakers and lobbyists told Bloomberg BNA that a provision to block the DOL's proposed fiduciary rule is among the bill's labor policy riders with the best chance of surviving the appropriations process.

Best Interest Principles: A bipartisan group of House lawmakers teamed to release on Nov. 5 a set of “best interest” principles to form the basis of financial education and advice legislation they are  developing to counter the DOL's proposed fiduciary rule.  The principles address key concerns that critics have leveled against the DOL's proposed rule, such as fears that the regulation would restrict advice for low- and middle-income investors and small businesses. The principles would require that advisers act in their clients' best interest, but don't include the word “ fiduciary”—and don't include the legally binding contractual structure in the DOL proposal.

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