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The Labor Department’s controversial fiduciary rule is likely going to see its most substantial delay to date.
The agency said Aug. 9 in court documents that it sent the Office of Management and Budget a proposal to delay by 18 months several portions of the rule. Those portions, including the best interest contract exemption, were set to take effect Jan. 1, but the DOL is proposing that implementation be delayed until July 1, 2019.
The proposal will undergo evaluation by the OMB before it’s formally issued by the DOL. The OMB has already given approval twice this year to other proposals by the DOL to delay the rule.
The Obama-era fiduciary rule requires that financial advisers act in their clients’ best interest when giving retirement investment advice, among other things. The Trump administration has now delayed portions of the rule on several occasions. Parts of the rule that the DOL called the “least controversial” went into effect June 9. The rule is under review by the agency.
The DOL asked for feedback on the rule in a request for information that included a question as to whether the Jan. 1 date should be delayed. Opponents of the rule, including the Financial Services Institute, the Securities Industry and Financial Markets Association, and the Investment Company Institute, pushed for a further delay, saying that the department should finish its review of the rule before anything else is set in motion.
The proposed relief is already getting the full backing of rule opponents. “This proposed delay represents an important step in protecting Main Street Americans’ access to retirement planning advice, products and services. While the delay is significant, it is critical that the DOL uses the 18 months to coordinate with regulators, in particular the SEC, to simplify and streamline the rule,” FSI President & CEO Dale Brown told Bloomberg BNA.
But rule supporters aren’t happy with the change.
“The conflict of interest rule is vital for low-income workers who count on every dollar that they can set aside for retirement. The DOL has already delayed portions of this rule from taking effect twice, and its repeated efforts to delay the rule create additional uncertainty for financial providers and for retirement savers, not to mention a wasteful misuse of government resources,” Christine L. Owens, executive director of the National Employment Law Project, told Bloomberg BNA in an email.
The Washington-based Consumer Federation of America also expressed its displeasure with a proposed change. “Retirement savers need and deserve the full protections of the rule on January 1.” Micah Hauptman, financial services counsel at CFA, told Bloomberg BNA in an email.
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