GOP Lawmakers Press DOL to Reissue Amended Fiduciary Rule

Lawmakers tell Perez to tell them by Oct. 21 how DOL will make ‘substantial changes’ to rule

Labor Secretary Thomas Perez. (Photo: AP) Labor Secretary Thomas Perez. (Photo: AP)

More than 100 House Republicans told Labor Secretary Thomas Perez in an Oct. 6 letter to tell them by Oct. 21 how the Department of Labor will make “substantial changes” to “shortcomings” in its fiduciary plan, but to also allow stakeholders to view those changes before issuing a final rule.

The letter, sent by Reps. Mike Kelly, R-Pa., and Sam Johnson, R-Texas, both members of the House Ways and Means Committee, told Perez that “given the scope of the necessary changes and the significant consequences for retirement savers — especially those with smaller account balances — we strongly urge you to provide stakeholders with an opportunity to review the changes” before the rule advances and is submitted to the Office of Management and Budget.

The lawmakers said that while they support a best interest standard, they have “serious reservations that the details of the current proposal will severely disrupt the availability of affordable financial education and investment advice while also restricting product choice and retirement security for many American families.”

Three former heads of the Securities and Exchange Commission said Tuesday that the SEC should move on a fiduciary rule, with former SEC chief Harvey Pitt predicting that while DOL may be “ahead now” in its fiduciary rulemaking, the department may not “finish ahead.”

Once DOL proposes its rule, Pitt said, “there will be a lot of behind-the-scene discourse to try to accommodate the disparities that exist” between DOL and SEC in terms of fiduciary regulation. “We saw that in the swaps regulation with the SEC and the CFTC; they regulate the exact same conduct differently.”

The comment period on DOL’s rule to amend the definition of fiduciary under the Employee Retirement Income Security Act ended on Sept. 24. Opponents to DOL’s rule are taking issue with the fact that Perez has stated DOL will issue a final rule after considering the comments received.

Tim Hauser, deputy assistant secretary for program operations of DOL’s Employee Benefits Security Administration, told attendees at an event held by the Investment Management Consultants Association at the National Press Club in Washington on Sept. 30 to “bear in mind that this is just a proposal; we just finished a notice and comment period, and I have little doubt that the rule is going to change as we move to a final.”

The same day, the House Financial Services Committee passed Rep. Ann Wagner’s bill, HR 1090, the Retail Investor Protection Act, which stops DOL from moving forward on its fiduciary rule until the SEC acts on its own. The bill was referred to the full House.

--- Check out SEC Needs to Move on Fiduciary Rule, Ex-SEC Chiefs Say on ThinkAdvisor.

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