Thursday, September 07, 2017 6:45 PM PT
SIFMA Applauds Delay of DOL Fiduciary Rule

     (CN) -The Department of Labor proposed to move enforcement of the 2016 fiduciary rule from Jan. 1, 2018 to July 1, 2019. The 2016 rule initially had an enforcement date of April 10, 2017.
     Meanwhile, the Trump administration is checking to see what it would like to axe from the Barack Obama administration rule.
     Obama's 2016 fiduciary rule requires a retirement planner look after the best interests of the consumer, to keep planners from putting unwary customers into high-cost or high-risk products to gain commissions. Detractors say the rule restricts sales and takes away the customers' choice.
     The Securities Industry and Financial Markets Association respondedin kind, stating that the rule harms "retirement savers by limiting or eliminating access to investment services and products and raising costs," in a press release.
     SIFMA supports the delay of implementation of the fiduciary rule and its exemptions, stating it "would help mitigate customer confusion around the rule and give the DOL adequate time to complete its comprehensive review as mandated by the president."
     If it were to become final, the Employee Benefits Security Administration proposal also would delay implementation of the Best Interest Contract Exemption; the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs; and a Prohibited Transaction Exemption for Certain Transactions Involving Insurance Agents and Brokers, Pension Consultants, Insurance Companies, and Investment Company Principal Underwriters, the notice of proposed amendments to these exemptions states.
     The Trump administration is particularly concerned that, without a delay in the applicability dates, regulated parties may incur undue expense to comply with conditions or requirements that it ultimately determines to revise or repeal, according to the proposal.
     On April 8, 2016, the Obama administration replaced the 1975 regulation with the "fiduciary rule," which defines who is a "fiduciary" of an employee benefit plan by giving investment advice to a plan, participants or beneficiaries, and also applies to the IRC. It treats investment advisers as fiduciaries in a wider array of advice relationships than was true under the 1975 regulation, according to the Labor Department.
     The DOL also published two new administrative class exemptions from the prohibited transaction provisions of ERISA and the IRC: The Best Interest Contract Exemption and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, plus amendments to previously granted exemptions (collectively referred to as "PTEs," unless otherwise indicated). The Fiduciary Rule and PTEs had an original applicability date of April 10, 2017.
     In February, President Trump directed the DOL to analyze the likely impact of Obama's Fiduciary Rule on access to retirement information and financial advice, and March 2, the department proposed a 60-day delay of the applicability date of the rule and PTEs, according to the proposal.
     Later, the Trump administration extended the applicability date of the Fiduciary Rule by 60 days from April 10 to June 9 ("April Delay Rule"), the proposal states. It also extended from April 10 to June 9, the applicability dates of the BIC Exemption and Principal Transactions Exemption and required investment advice fiduciaries relying on these exemptions to adhere only to the Impartial Conduct Standards as conditions of those exemptions during a transition period from June 9, 2017, through January 1, 2018.
     According to the proposal, the April Delay Rule also delayed the applicability of amendments to an existing exemption, Prohibited Transaction Exemption 84-24 (PTE 84-24), until Jan. 1, 2018, other than the Impartial Conduct Standards, which became applicable June 9, 2017. Lastly, the April Delay Rule extended for 60 days, until June 9, 2017, the applicability dates of amendments to other previously granted exemptions. The 60-day delay was considered appropriate by the department at that time, including for the Impartial Conduct Standards in the BIC Exemption and Principal Transactions Exemption, while compliance with other conditions for transactions covered by these exemptions, such as requirements to make specific disclosures and representations of fiduciary compliance in written communications with investors, was postponed until Jan. 1, 2018, by which time the department intended to complete the examination and analysis directed by the president's memorandum.