Now that the comment periods have expired on the Department of Labor’s fiduciary rule, industry groups say they “need certainty as soon as possible” about whether or not Labor will delay the Jan. 1 compliance date, and at least one attorney anticipates a quick delay.
“I expect that we will hear something [regarding a delay] at the end of this month or in the first half of September,” Fred Reish, partner in Drinker Biddle & Reath’s employee benefits and executive compensation practice group in Los Angeles, told ThinkAdvisor Tuesday.
Reish also anticipates that Labor will issue revisions to the rule, but that “there’s no telling” when such revisions will come.
Labor “needs to address the delay immediately,” adds Steve Saxon, partner at Groom Law Group in Washington. “This is because financial institutions will need as much time as possible to convert to the new disclosure regime, if there is one.”
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Depending on “how much lead time” Labor gives firms to implement any revisions, it “should announce substantive revisions by November, at the latest,” Saxon continues, but “this could be somewhat challenging” because the deputy assistant secretary and assistant secretary positions at Labor have yet to be filled by the White House.
The first deadline under a two-part request for information issued by Labor on June 29 expired July 21. The department sought comments on whether it should delay the fiduciary rule’s Jan. 1 compliance date. The second part of the RFI, with a comment period ending Monday, solicited feedback on 18 questions about the rule.
The rule’s Impartial Conduct Standards took effect on June 9.
The Securities and Exchange Commission has also been seeking feedback on a laundry list of items not only regarding Labor’s fiduciary rule, but to inform a potential SEC fiduciary rule.
Industry groups have also argued that a delay is required so that Labor and the SEC can coordinate on a fiduciary rule.
SEC Chairman Jay Clayton told lawmakers on July 26 that with the Labor rule being “on the books, … we’re in a position where we could have different standards for the individual investor — that doesn’t seem right.”
The Committee of Annuity Insurers — which includes 29 member companies such as AXA, AIG and Voya Financial, that represent over 80% of the annuity business in the United States — told Clayton in their comment letter that “since there is now a strong possibility that some parts of the fiduciary rule and related exemptions will change,” Labor should delay the Jan. 1, applicability date “in order to prevent affected firms, including the Committee’s member companies and affiliates, from having to prepare for and implement a regulatory regime that might differ materially” from the current rule.
Without such a delay, the committee said, “affected firms are likely to incur duplicative and unnecessary costs, which, one way or the other, will be passed onto Americans saving for retirement.”
Just as important as a delay,” the groups continued, “is the need for firms to have certainty as soon as possible about whether or not there will be delay.”