On Wednesday, the Big “I” submitted a comment letter to the U.S. Department of Labor (DOL) regarding extending the fiduciary rule transition period and delaying the applicability date for certain portions of the rule.
The fiduciary rule is a complex federal regulation that tightens conflict of interest rules under the Employee Retirement Income Security Act and requires insurance agents and brokers who give guidance about certain retirement investments—including some annuities and health savings accounts—to adhere to a fiduciary standard of care.
The fiduciary rule was finalized in 2016, but implementation was delayed until June 9 of this year, when it took partial effect. The rule is currently scheduled to take full effect on Jan. 1, 2018. However, in anticipation of amending some portions of the rule—including provisions related to class action lawsuits—the DOL is currently seeking comments on delaying that date even further, until July 1, 2019.
In its letter, the Big “I” supported delaying the January implementation deadline by at least 18 months. In addition, the Big “I” suggested the DOL consider proposing further delays based on the scope of any future potential rule changes.
The Big “I” opposes the rule, and a recent member survey found that it’s already harming independent insurance agencies and small businesses around the country. Almost half of survey respondents who sold affected products indicated they have already exited or will exit the market before the end of this year as a direct result of the rule.
While the rule remains partially in effect, agents and brokers who sell and service impacted products must follow “impartial conduct standards.” The standards specifically require advisers and financial institutions to:
The DOL issued an FAQ document and a temporary enforcement policy on its website to help advisers understand the requirements that currently apply.
Jennifer Webb is Big “I” federal government affairs counsel.
