Now that the comment period on the Department of Labor’s fiduciary redraft has ended, opponents and those in favor of the rulemaking will participate in hearings regarding the plan the week of Aug. 10.
Opponents of the DOL’s redraft of its rule to amend the definition of fiduciary for retirement advice wasted no time filing comment letters by the July 21 deadline as well as releasing studies challenging numerous aspects of the plan.
The Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce submitted several iterations of their objections to the redraft, as did the Financial Industry Regulatory Authority.
The Senate Committee on Health Education Labor and Pensions (HELP) held a hearing the same day the comment period expired, calling it “DOL’s Unworkable Investment Proposal for American Families and Retirees.”
DOL said it had received 300 comment letters regarding its redraft as well as petitions as of the day before the comment deadline expired.
SIFMA submitted eight comment letters on DOL’s proposed rule to redefine fiduciary under the Employee Retirement Income Security Act that not only address the fiduciary rule itself but also the controversial best interest contract exemption (BICE) and other prohibited transaction exemptions. The Wall Street trade group also submitted two studies highlighting the plan’s operational and economic challenges.
The U.S. Chamber of Commerce submitted four separate comment letters on DOL’s plan as well as its related prohibited transaction exemptions along with an economic impact analysis.
Ken Bentsen, SIFMA’s president and CEO, reiterated on a call with reporters SIFMA’s position that the securities regulators—the SEC and FINRA—should lead a best interest standard rulemaking.
“I’m concerned we’ll end up with multiple standards that will confuse clients,” Bentsen said. “We believe DOL is the wrong regulator to be in the lead here, and the rule as written completely misses the mark.”
On a separate call held by the Chamber of Commerce, Brad Campbell, former head of DOL’s Employee Benefits Security Administration (EBSA), who’s now a lawyer with Drinker Biddle & Reath in Washington, said that while DOL intends its fiduciary rule to help IRA owners get better advice, “it undercuts all of those efforts; it will go the other direction and make it more difficult for IRA owners and small businesses to get advice.”
Calling DOL’s plan the “most sweeping” rule since ERISA, Campbell said the redraft “is technically flawed,” adding that “the way it has been proposed it cannot work in practice; it conflicts with other securities regulation.”
SIFMA’s Bentsen noted that while it was “premature” to say whether SIFMA would challenge DOL’s rule in court, SIFMA has asked DOL in its comment to extend its “extremely aggressive” 60-day implementation and eight-month “applicability” timeline. The original ERISA rule’s 36-month implementation deadline, Bentsen said, is what SIFMA has requested “if [DOL] goes to a final rule.”
The Chamber wants a “negotiated rulemaking,” said Alice Joe, managing director of the Chamber’s Center for Capital Markets Competitiveness.