Comments are flooding in to the Department of Labor regarding its proposed rule to extend for 60 days the applicability date of its fiduciary rule under the Employee Retirement Income Security Act.
The March 1 proposal allows for a 15-day comment period on Labor’s plan to move the rule’s first compliance date from April 10 to June 9. The official notice was published in the Federal Register on March 2.
Labor is also taking comments for 45 days on a list of questions about the impact of the fiduciary regulation and the exemptions, including whether the rule will spark an increase in litigation.
As anticipated, commenters are weighing in on both sides – for and against a delay, and eventual overhaul or repeal, of Labor’s fiduciary rule.
Meanwhile, the D.C. Circuit on Tuesday published the schedule for the National Association for Fixed Annuities’ appeal. The group is challenging a trial judge’s refusal, in November, to stop enforcement of the fiduciary rule. The D.C. Circuit in December also declined to freeze implementation of the rule.
NAFA has until April 17 to submit its opening brief to the D.C. Circuit. Labor has until May 17 to file its brief. The court set May 31 as the deadline for NAFA to file a reply. Oral arguments have not been set, and the D.C. Circuit doesn’t typically hear cases in the summer except on an emergency basis.
The schedule suggests the court could hear arguments in the fall and issue a ruling in late 2017 or sometime early next year.
In its comment letter on the fiduciary rule’s delay, Betterment founder and CEO Jon Stein said that while the rule “may not be perfect — no regulation ever is,” the fiduciary rule “is the only realistic hope for prompt action to improve the quality of retirement advice.”
A delay, Stein continued, “would be bad enough, but it would be even worse if the delay is used as an opportunity to dilute the rule or remove it altogether. We are extremely concerned about this possibility.”
Labor, Stein maintained, “can certainly” revise aspects of the rule, “once the rule is actually in effect. That is, the Department can take another look at the rule without imposing a delay that would imperil the rule itself.”
Stein worries that the “positive changes” in the investment industry since the rule’s passage, “such as reductions in fund fees and changes to conflicted service models” could disappear if the rule is “watered down” or delayed. “For the benefit of the millions of Americans saving for retirement, we ask that the Department of Labor allow the fiduciary rule to go into effect this April.”
Financial Engines told Labor that while some in the industry may desire additional time to comply, Financial Engines “is proud to be in full compliance and we are encouraged that many others have announced their intention to be in compliance by the original applicability date.”