Donald Trump’s Labor Department Proposes Delaying ‘Fiduciary’ Rule

Donald Trump’s Labor Department Proposes Delaying ‘Fiduciary’ Rule

This week, the Department of Labor published its OMB-approved proposal to delay the fiduciary rule. Unlike prior reports that it would be a 180-delay, though, the actual proposal turned out to be a mere 60-day delay, that would push the applicability date for the new rule from April 10th to June 9th. Notably, though, the proposal itself is still that: just a proposal. It will now open for a 15-day comment period ending March 17th, after which the DoL has to process the comments, and then go back to OMB again for final approval; experts are projecting that at best, it means the delay won’t even be official until the week before the original April 10th applicability date. And even then, it’s still not certain the rule will actually be delayed; as one commentator has pointed out, the final version of the proposal was dubbed “economically significant”, which is important because it imposes a requirement for a cost-benefit analysis to be done just to justify the delay, and if the DoL and OMB don’t dot their i’s and cross their t’s, consumer advocacy groups like the Consumer Federation of America may be able to sue the DoL to block the delay as being done in an “arbitrary and capricious manner”. On the other hand, paired with the short comment period for the delay itself, the new proposal from the Department of Labor also solicits comments for a 45-day period regarding President Trump’s Executive Memorandum directing the DoL to reconsider the rule, which ostensibly would be used to follow up with another proposal to further delay, alter, or even attempt to rescind the rule during the 60-day-delay period (if it happens in the first place). Or at least, to potentially re-propose another delay, tacked onto the end of the initial 60-day delay, as a part of re-proposing yet another new/different version of the rule. Still, given that the industry has complained throughout that the Department of Labor acted “hastily” in rolling out the fiduciary rule in the first place, it’s now challenging for the DoL to quickly roll out proposals that would delay or amend the rule before it takes effect for at least some period of time. And with the reality that even in the best of circumstances, the delay won’t be official until literally a week or two before the April 10th applicability date, some are suggesting it’s already “too little too late”, as financial institutions are already fully developing their fiduciary compliance systems and processes anyway at this point, just in case the rule actually stays after all.



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