Even before the four-day stint of mid-August hearings at Department of Labor headquarters in Washington, Labor Secretary Tom Perez confirmed the ultimate direction that Labor would take on its fiduciary reproposal: A final rule will be issued once the comment period expires.
Officials anticipate that rule will come by May 2016. The DOL hearings were held from Aug. 10-14, but Perez told Rep. Ann Wagner — a defiant opponent of the DOL’s plan to amend the definition of fiduciary under the Employee Retirement Income Security Act — in an Aug. 7 letter that DOL has “undertaken incredibly thorough public outreach over the past five years” as it has designed the proposal.
Beyond the issues raised during DOL’s exhaustive outreach over the years, as well as the 330,000 comments Labor had received at press time from “various stakeholders” on the proposal since it was released in April, Perez told Wagner that DOL would also consider the issues raised during the hearings and “move forward toward issuing a final rule that balances the input we have received.”
Perez said in a blog post the day before the last hearing that the “testimony and the multitude of public comments we continue to receive will help shape a rule that protects the retirement savings of workers and families, and gives advisors and firms the flexibility they need to continue to make a good living while offering retirement advice in the best interest of their clients.”
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The comment period will reopen for 14 days after the hearing transcript is published; at press time the week after the hearing, a DOL spokesperson told IA that Labor had yet to receive the transcript. Once it is received, DOL could then provide a specific date as to when the comment period would expire.
Wagner, other lawmakers and broker-dealer trade groups have been pressuring DOL to reissue a reproposal of the plan once the comment period is up.
“People need a second look” at the proposal, Kent Mason, a partner with Davis & Harman, a Washington-based law firm that represents big financial companies, told Timothy Hauser, deputy assistant secretary for program operations at DOL’s EBSA, during the hearing. “You need to repropose.”
But Hauser, who represented the DOL during the hearings, shot back that “to prejudge that we need new notice and comment is premature.”
Hauser, who led the question-and-answer sessions during the hearings, took center stage away from EBSA head Phyllis Borzi, the main architect of the fiduciary rulemaking, who, after making opening remarks the first day, became an audience member. Borzi noted that the hearings were “far from a dry exercise” in updating the 40-year-old ERISA law.
Issues raised at the hearings focused on how to make the controversial best interest contract exemption (BICE) workable; mandatory arbitration; whether the plan as proposed would prompt class-action lawsuits; and the “Father of Fiduciary” Don Trone’s claim that DOL’s plan would still not stop a Bernie Madoff-type Ponzi scheme.