WASHINGTON (Legal Newsline) - On Thursday, the U.S. Department of Labor announced a proposal to delay full implementation of its fiduciary rule for 18 months.
Earlier this week, the Office of Management and Budget, or OMB, approved the proposal delaying the remaining provisions of the rule.
The rule, released in April 2016, mandates financial professionals who service individual retirement accounts, including IRAs and 401(k) plans, to serve the “best interest” of the savers and disclose conflicts of interest.
According to the DOL, the proposed extension delays from Jan. 1, 2018 to July 1, 2019 the special transition period for the rule’s best interest contract, or BIC, exemption, the principal transactions exemption and certain amendments to the prohibited transaction exemption.
In June, the DOL published a Request for Information, or RFI, related to the rule and whether to delay its full implementation.
“The RFI is an opportunity for the public to provide data and information that may be used to revise the rule and associated exemptions,” the department said in June 29 news release.
The DOL said public input would assist in “determining future actions on the rule and related exemptions.”
The proposal was published for public comment in Thursday’s edition of the Federal Register and is on the Employee Benefits Security Administration’s website.
The department, in a news release, said it will accept public comments for 15 days following its publication.
In April, the department released a measure officially delaying the implementation of the rule and its related exemptions by 60 days, until June 9.
But written disclosure requirements and the full BIC exemption were scheduled for Jan. 1, 2018 implementation.
The DOL and its new secretary, R. Alexander Acosta, last month notified a federal court that it submitted to the OMB proposed amendments to three exemptions.
The proposed amendments included an “extension of transition period and delay of applicability dates” from Jan. 1, 2018 to July 1, 2019, according to the Aug. 9 filing in the U.S. District Court for the District of Minnesota.
The brief, two-page court filing -- a notice of administration action -- did not include any further explanation. The department’s news release also did not provide any explanation.
But the Financial Services Roundtable, an advocacy organization for the nation’s financial services industry, said it is pleased with the news.
FSR argues the move will help more savers maintain access to “quality and affordable” financial advice.
“A rule requiring financial professionals to act in the best interest of their customers is just common sense, but such a rule should not involve miles of bureaucratic red tape,” FSR CEO Tim Pawlenty said in a statement.
“A reasonable delay will allow proper coordination between the SEC (U.S. Securities and Exchange Commission) and DOL, resulting in an improved ‘best interest’ rule that will benefit even more savers than the rule currently proposed by just the DOL.”
FSR contends the SEC, having the necessary expertise, should take the lead.
According to a recent poll, many believe the DOL’s fiduciary rule, in its current form, already is harming retirement savers and financial professionals.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.