Securities and Exchange Commission Chairman Jay Clayton told Senate lawmakers Tuesday that harmonizing a fiduciary rule with the Labor Department is a top priority for him and laid out four steps the agency plans to take on such a harmonized rule.
“Are you working with the DOL to harmonize that fiduciary rule so that people don’t get ping-ponged back and forth between two rules?” Sen. Jon Tester, D-Mont., asked Clayton during a Senate Banking Committee oversight hearing Tuesday.
“Yes,” Clayton responded.
“You anticipate that harmonized rule will be out when?” Tester probed further.
While not specifying a timeframe, Clayton responded: “This is a priority for me. Everything can’t be a priority for me … we’re pushing this one.”
Sen. Tim Scott, R-S.C., said during the hearing that Labor’s fiduciary rule “has had a negative impact on many Americans. Restricting access to professionals in the financial industry has a negative impact on the resources available to the average American for retirement. The last thing we need to do at this point is to find ways to get experts out of the households, which is the unintended consequence of the fiduciary rule, from my perspective.”
Scott said that he was “pleased” that Labor is seeking to delay the rule’s January 2018 compliance date by 18 months.
He then queried Clayton on the progress of the SEC’s coordination with Labor and the delay.
Clayton responded that he thanked Labor Secretary Alexander Acosta for “reaching out to say we [the SEC and DOL] should work together on this” harmonized fiduciary rule. “And I do believe we should work together.”
The commission, he continued, is now reviewing the request for comment the agency is seeking regarding “updated views from investors and industry participants on the effects of the DOL rule and what we should do going forward in terms of standards of conduct,” Clayton said.
He then detailed the four aspects of “any joint rulemaking” that’s put forth by the SEC, Labor and other regulators, including state insurance regulators.
Investors must have choice, Clayton said, so “they aren’t pushed into a narrow set of circumstances as a result of whatever steps we take.”
Second, that there’s clarity so “that investors know what type of person they’re dealing with and they know the obligations owed to them.”
Third, that there is consistency. “If you have two different types of accounts but you’re facing the same person — a retirement account and a non-retirement account — there ought to be consistency with respect to those accounts.”