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February 02, 2016 at 01:20 PM
Companion legislation crafted as an alternative to the Department of Labor’s proposed fiduciary rulepassed a U.S House of Representatives Education and Workforce Committee hearing on a party-line vote.
The Affordable Retirement Advice Protection Act, introduced by Rep. Phil Roe, R-Tennessee, and the Strengthening Access to Valuable Education and Retirement Support Act, introduced by Rep. Peter Roskam, R-Illinois, survived the mark-up hearing with 22 Republican votes, and 14 Democratic dissenters.
Each bill is co-sponsored by at least several Democrats.
Together, they would insist a best-interest standard of care on providers of financial advice to retirement plans and IRAs, based on a set of principals that would assure no regulation could restrict low and middle-income Americans’ access to retirement planning.
Both bills would also give Congress the authority to vote down the DOL’s rule within a 60-day period after it is ultimately finalized.
That provision is “constitutionally suspect,” according Rep. Bobby Scott, D-Virginia, the ranking member on the committee.
Scott, a strong supporter of the DOL’s proposal, said the two proposed bills represent a “deeply flawed” response to the DOL’s rule, in part because they establish what he said was a “one house veto” power that violates the separation of powers established in the U.S. Constitution.
Further more, the alternative legislation creates advisor disclosure requirements that are too lax, and allow unscrupulous advisors “to use fine print and boilerplate language” to “disclose and disclaim away their fiduciary obligation,” said Scott.
The DOL recently sent its proposal to the Office of Management and Budget, where it will be reviewed for at least two months. Then, Congress will have two months to review the proposal before it is finalized.
Supporters of the rule are counting on that happening before the end of President Obama’s final term.
Opponents of the rule are holding out hope that attempts to pass alternative legislation, which would have to survive a veto from President Obama, will at the very least bring more attention to what they argue is a proposal riddled with unintended consequences.
