The U.S. Chamber of Commerce may take legal action or seek a legislative remedy if the Department of Labor’s final rule to amend the definition of fiduciary on retirement accounts fails to fix the “significant concerns” raised during the rule’s comment period, said David Hirschmann, president and CEO of the Chamber Center for Capital Markets Competitiveness.
During a Wednesday briefing at Chamber headquarters in Washington, Hirschmann said that while it’s too early to predict whether the next step in opposing DOL’s rule to change the definition of fiduciary under the Employee Retirement Income Security Act will be “legislative or in the courts,” the Chamber will “only go to court when our members say complying with the rule is impossible.”
Said Hirschmann: “We’ve never said kill the rule, we’ve said fix the rule. If it turns out they [DOL] never listened [in making changes], we should have just killed it, but engaging constructively is the right approach” to addressing the rule’s concerns.
Legal challenges to DOL’s rule, once released, may focus on lack of a sufficient cost-benefit analysis, the “private right of action” DOL tries “to create,” as well as legal “regulatory process” challenges, Hirschmann said.
DOL’s rule, which is under review at the Office of Management and Budget, is expected out as early as April. Hirschmann said that while he couldn’t predict whether the rule was undergoing an expedited review, DOL “pre-cleared” the rule with OMB before sending it there on Jan. 28.
What pushed the Chamber to oppose DOL’s rule, Hirschman said, was “the impact of DOL’s proposal on small business.” While nearly every small-business owner “would like to provide a retirement plan for their employees and for themselves as part of the business,” he said, ”they’re often afraid of the cost and complexity of doing so.” DOL’s rule “would actually make that worse, because what it says is, if you have less than 100 employees, we’ll consider you unsophisticated. And therefore, we want to put added burdens on both you and anybody providing investment advice to you to make sure that your workers are protected. Those added costs will be directly passed on, either to the small businesses or to the individuals.”
He added: “We’d like to get the 17% of small businesses that offer a retirement plan higher, and our fear is that the rule will make it harder” to boost that number.
Alice Joe, managing director for the Chamber’s Center for Capital Markets Competitiveness, added during the briefing that the Chamber has urged OMB to “take a closer look” at the DOL rule’s “cost-benefit analysis,” adding that she “wouldn’t be surprised” if OMB has shared the rule with the Securities and Exchange Commission and asked for the agency’s “clearance.”
Part of OMB’s review “is to make sure that the [DOL] rule doesn’t conflict with the SEC’s” areas of jurisdiction, Hirschmann added.
Rep. Jared Polis, D-Colo., said during the Feb. 2 markup of two bills to replace DOL’s rule that considering the bills is “premature,” and that lawmakers “should be having this discussion after we see the final [DOL] rule.”
Polis, ranking member on the Health, Employment, Labor and Pensions subcommittee, sent a letter to OMB the same day requesting a “private and secure” viewing for himself and other lawmakers of the rule DOL sent for review on Jan. 28.
The bills approved on Feb. 2 are the Affordable Retirement Advice Protection Act (H.R. 4293), introduced by Rep. Phil Roe, R-Tenn., and the Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act (H.R. 4294), introduced by Rep. Peter Roskam, R-Ill.
Hirschmann noted Wednesday that “members of Congress tell us that if, in fact, DOL has not fixed some of the primary concerns [in the rule], they are willing to take the next step legislatively.”
— Check out SIFMA, U.S. Chamber Barrage DOL as Fiduciary Rule Comment Deadline Looms on ThinkAdvisor.