The Department of Labor on Wednesday filed a rule with the Office of Management and Budget for the official 18-month delay of its fiduciary rule.
The rule, which must be approved by OMB, delays the fiduciary rule’s Jan. 1, 2018, effective date until July 1, 2019.
The rule is titled 18-Month Extension of Transition Period and Delay of Applicability Dates; Best Interest Contract Exemption; Class Exemption for Principal Transactions; PTE 84-24.
As proposed, Labor is extending the applicability date of the BIC, 84-24 and Principal Transactions exemptions to July 1, 2019, said Fred Reish, partner in Drinker Biddle & Reath’s employee benefits and executive compensation practice group in Los Angeles. Reish said, “That also means that the transition versions of the exemptions will apply until June 30, 2019. For example, the transition BIC exemption requires that advisors and their financial institutions comply with the Impartial Conduct Standards: the best interest of care, no more than reasonable compensation and no material misleading statements.”
Reish adds that “it will be interesting to see if any additional conditions are imposed and whether the nonenforcement policy is extended. However, we won’t be able to see the text of the extension until the OMB approves it.” He expects OMB “to move very quickly on this [approval], perhaps taking only one or two weeks.”
Barbara Roper, director of investor protection for the Consumer Federation of America and a staunch fiduciary rule advocate, told ThinkAdvisor on Thursday that Labor’s filing “isn’t a delay. A delay implies the provisions will eventually take effect. Unfortunately, the DOL has made crystal clear that they have no intention of ever implementing key provisions that are essential to the rule’s effectiveness and that make its requirements enforceable.”