DOL Fiduciary Rule Clears White House Review
Labor Department's policy, though, "is unlikely to stand in the Biden administration," said Consumer Federation of America's Barbara Roper.
The Office of Management and Budget has completed its review of the Labor Department’s fiduciary prohibited transaction exemption to align with the Securities and Exchange Commission’s Regulation Best Interest.
OMB’s notice states that the PTE was reviewed with changes, so Labor will incorporate those changes and finalize the rule quickly, industry officials explained.
Because the rule is “economically significant,” the effective date should come 60 days after publication in the Federal Register, explained Barbara Roper, director of investor protection for the Consumer Federation of America, in a Tuesday morning email to ThinkAdvisor.
“I wouldn’t put it past them [Labor] to include a 30-day effective date, as they did on the proxy rule, to try to get it effective before Inauguration Day,” Roper said. However, such a timeline “would require them [Labor] to be very nimble. Basically, they’d need to get it published this week.”
Steve Saxon, partner at Groom Law Group in Washington, stated in a separate Tuesday morning email to ThinkAdvisor that Labor “should cut it [the effective date] back to 30 days by taking the view that the exemption is not ‘economically significant.’”
A 60-day effective date, Saxon continued, “takes the exemption past Inauguration so the Biden administration can put a hold on it immediately. With a 30-day effective date, the exemption would become final before [Jan. 20], making it a little stickier.”
OMB’s completed review “is very good news,” Saxon said. “If this exemption gets finalized and becomes effective, it will become the most heavily relied upon exemption since ERISA was enacted.”
Roper, however, expressed her disappointment that Labor didn’t meet with investor advocacy groups before completing its review.
OMB completed its review “after meeting with industry representatives but canceling meetings it had scheduled for later this month with AARP and PIABA,” Roper stated.
The Office of Information and Regulatory Affairs, which is part of the OMB within the Executive Office of the President, finished its review of the PTE on Monday.
The organization, Roper added, “concluded its review without hearing from investor groups. That’s the kind of abuse of process we’ve come to expect. Ultimately, however, I don’t think it will change the outcome. No matter how hard they [the Trump administration] try to make it to reverse, this policy is unlikely to stand in the Biden administration.”