DoL Seeks To Delay Fiduciary Rule Until July 2019

DoL Seeks To Delay Fiduciary Rule Until July 2019

The Department of Labor has been embroiled in several lawsuits challenging its new fiduciary rule, and in a brief filled in its Minnesota lawsuit with Thrivent Financial this week, the DoL indicated that it is submitting to OMB a proposal to delay the remaining parts of the rule from the current January 1st, 2018 implementation date, out to July 1 of 2019, instead. Notably, the core of the DoL fiduciary rule has already taken effect, but compliance is currently in a “transition period”, such that firms and advisors are required to adhere to the Impartial Conduct Standards (that they give best-interests advice, for reasonable compensation, and make no misleading statements), but don’t have to comply with the full scope of disclosure and other requirements of the Best Interests Contract Exemption. The proposed delay would extend the current transition period, allowing firms another 18 months before being required to step up to full compliance (and, notably, also extending the time period during which DoL fiduciary opponents can continue in their attempts to derail the rule further), and would also extend the time period before the indexed annuity industry must complete its transition from the existing PTE 84-24 rules to the full BIC requirements. Yet the latest proposal of the DoL to delay the rule is just that – a proposal – which still has to be reviewed by OMB (for up to 90 days), and then the DoL would release it to a public comment period (with comments being submitted by both fiduciary advocates and adversaries), and then a final change rule would have to be re-submitted to OMB if the comments were supportive of further delay… and it’s not clear yet whether the DoL actually has a substantive and legally justifiable reason to engage in a further delay (not to mention one as long as 18 months). Which means at this point, the latest proposed delay just adds another layer of uncertainty to the potential timing of the DoL fiduciary rule, and it won’t likely be clear if the new delay is even going to be a delay until this fall.

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