The Labor Department on Monday announced the official 18-month extension for the start of key provisions of the fiduciary rule.
Labor announced the special Transition Period for the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24 (PTEs), will move from the previous Jan. 1, 2018, compliance date to July 1, 2019.
The extension gives Labor time “to consider public comments submitted pursuant to the Department’s July Request for Information, and the criteria set forth in the Presidential Memorandum of Feb. 3, 2017, including whether possible changes and alternatives to exemptions would be appropriate in light of the current comment record and potential input from, and action by, the Securities and Exchange Commission, state insurance commissioners and other regulators,” Labor said in a Monday release.
President Donald Trump directed the Department to prepare an updated analysis of the “likely impact” of the fiduciary rule on access to retirement information and financial advice.
During the extended Transition Period, fiduciary advisors “have an obligation to give advice that adheres to impartial conduct standards,” Labor said.
The Save Our Retirement Coalition, which includes the Consumer Federation of America and Americans for Financial Reform, blasted the 18-month delay, stating in a Monday release that the action “is effectively a repeal of the fiduciary rule’s most critical provisions – the provisions that ensure the rule is effective and enforceable and that financial advisers and their firms are accountable for providing the best interest advice retirement savers both want and need.”
DOL, the Coalition said, “claims it is simply delaying the full implementation and enforcement of the fiduciary rule by 18 months, but delay implies these provisions will become applicable in the near future. However, the Trump Administration has made clear its goal is that these most critical provisions never become applicable. Instead, the Administration’s intent is to use this time to permanently dismantle key elements of the rule.”
Dale Brown, president and CEO of the Financial Services Institute, a fiduciary rule opponent, said the delay will allow the DOL “to conduct a thorough review of the rule, as ordered by President Trump, to ensure investor choice and access to retirement savings advice is protected.” In addition to the rule review, FSI, Brown added, is “encouraged by the DOL’s statement that they will coordinate with other regulators, including the SEC, to simplify and streamline the rule.”
Labor Secretary Alexander Acosta told lawmakers on Nov. 15 that the best-interest standard under the Labor Department’s fiduciary rule is “in effect,” and that he’s ready to take action against “willful violations” of those rules.