Phyllis Borzi, assistant secretary of Labor for the Employee Benefits Security Administration, said Tuesday that while EBSA has been “making progress” on its reproposal to amend the definition of fiduciary under ERISA, release of the revised plan won’t come in October “because we are not finished.”
EBSA’s semiannual regulatory agenda had said a reproposal to amend the definition of fiduciary under the Employee Retirement Income Security Act would come in October.
But Borzi told attendees at the Financial Services Institute’s Advisor Summit in Washington that the October deadline, which was announced in July, was an “educated guess” of when a reproposal could be sent to the Office of Management and Budget (OMB).
“The point of working on the reproposal is to get it right,” Borzi said. “We are trying very hard to make sure we’ve crossed all the T’s and dotted all the I’s. We shared many of the concerns that people have raised in the public comment process, and we want to make sure we’ve given it our best shot.”
Borzi made her comments during a one-on-one question and answer session with FSI President and CEO Dale Brown. FSI has been a staunch opponent of the DOL’s fiduciary plan. As Brown said before posing his questions to Borzi: the DOL’s fiduciary rule is a “high priority for FSI because [it is] concerned that it will limit access to advice.”
DOL is required to send its rule proposals to OMB, but the Securities and Exchange Commission is only required to send final rules to OMB.
Once DOL sends OMB its reproposed fiduciary rule, OMB then checks the proposal’s cost-benefit analysis and gives DOL feedback on the proposal, asking for changes if necessary. DOL must then make the changes and have them approved by OMB before putting the proposal out for public comment.
As Borzi said during her comments at the FSI event, OMB has “a minimum of 90 days” to review DOL’s fiduciary plan. “OMB is the reviewer that keeps us honest,” she said, making sure that DOL’s “regulation has been properly coordinated with the other agencies that have an interest in this issue.”
Borzi told ThinkAdvisor after her comments that she could not say when a reproposal would be sent to OMB.
Industry officials were surprised, disappointed and thankful for the delay.
“I am surprised” by the delay “considering the length of time that [DOL] has been working on the proposal,” Fred Reish, partner and chairman of the financial services ERISA team at Drinker Biddle & Reath, told ThinkAdvisor.