Phyllis Borzi, head of the Department of Labor’s Employee Benefits Security Administration (EBSA), told AdvisorOne on Monday that the department’s reproposed rule on fiduciary would be applied to individual retirement accounts. “We believe it’s a critical part,” of the rule, Borzi said.
For months, members of Congress, industry officials and the public urged the DOL to repropose its fiduciary rule amending the definition of fiduciary under the Employee Retirement Income Security Act (ERISA). Borzi (left) conceded on Sept. 19, announcing that EBSA would repropose its controversial fiduciary rule, and issue a new proposed rule in early 2012.
EBSA received many complaints about the first proposed rule including IRAs. Brad Campbell, the former head of EBSA who’s now counsel with the law firm Schiff Hardin in Washington, has been urging Borzi to repropose the fiduciary rule for some time. He told AdvisorOne in a previous interview that if the DOL applied its fiduciary rule to IRAs, “broker-dealers who are selling IRAs are going to have to change the way they operate and the way they get paid in connection with those IRAs.” Given the fundamental difference between IRAs and 401(k)s, Campbell continued, there is a valid question in: “Is DOL the right entity to regulate that [IRA] activity, or should this policy really be coming out of Treasury or the SEC?”