GAO Asked to Investigate Impact of DOL Fiduciary Rule

Two leading Democratic lawmakers on retirement issues are asking the Government Accountability Office to investigate the impact of the Labor Department’s fiduciary rule, which was vacated by the Fifth Circuit Court of Appeals a year ago, on the financial services industry, retirement plan sponsors, and retirement savers.

Labor’s rule, which was finalized in 2016 after nearly six years of effort, required a fiduciary standard of care on securities and rollover recommendations for all qualified retirement plan assets.

A consortium of brokerage, insurance and business trade groups sued the Labor Department, alleging it overstepped its rule making authority by attempting to regulate IRA assets.

The Fifth Circuit overturned the rule after three lower court rulings upheld it. The Trump Administration’s Labor Department dropped its defense of the rule when it opted to not petition the Supreme Court to review the case.

Instead, Labor issued a non-enforcement policy for the rule. It is scheduled to release a revised fiduciary rule this fall.

“In the past year, DOL appears to have done little, if anything, to warn retirement savers that they are now vulnerable to professionals who, according to DOL, have no obligation to put their clients’ interests before their own,” write Sen. Patty Murray, D-Washington, and Rep. Bobby Scott, D-Georgia, the ranking member and chair, respectively, of committees that oversee retirement policy and the Labor Department.