The chief architect of the Labor Department’s fiduciary rule, Phyllis Borzi, sees a tough road ahead for the Trump administration in repealing the rule.
“If the administration decides to flip it [the fiduciary rule] or make changes, they will be sued and the courts won’t view this favorably,” Borzi, former head of Labor’s Employee Benefits Security Administration, said Sunday at the fi360 conference in Nashville.
Borzi, who accepted the Committee for the Fiduciary Standard’s fiduciary of the year award before remarks at the event, conceded that “none of us really knows what’s going to happen with the [fiduciary] rule.”
On June 9, if the rule isn’t delayed further, the impartial conduct standards kick in, which means advice has to be given in a client’s “best interest, firms must charge reasonable compensation and not lie,” Borzi noted. Firms “can do it any way they want.”
A further delay beyond June 9 will create “uncertainty” that will be “really problematic,” Borzi said.
Blaine Aikin, fi360’s CEO, agreed during his opening remarks at the event that if there is a delay, which news reports say Labor Secretary R. Alexander Acosta is seeking, “that would be a major mistake.”
Delay, he said, “almost certainly means litigation from consumer organizations,” resulting in “an extended period of uncertainty.”
In comments to reporters after her remarks, Borzi said that “the courts generally are not willing to agree to let a new administration overturn an old administration’s rulemaking with no new evidence” that the rule is causing harm.
In assessing a repeal of the rule, “the courts are going to look to see whether there’s new evidence or whether the department did not do a thorough job in the evidence it had before it. We have now three district courts who have specifically held that we did.”
Borzi said that during her last two years of the Obama administration, “My goal … was to make sure that we had carefully gone through all the public comments and addressed each and every one of the public comments somewhere — in the preamble, the rule or economic analysis. [The Trump administration] has to match that.”