DOL Delays Part of Fiduciary Rule

While the fiduciary rule remains the law of the land, the Department of Labor (DOL) this week confirmed an 18-month delay for key portions of the rule—creating more time for the DOL to make anticipated changes to 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.

On Monday, the DOL officially delayed implementation of certain exemptions from the fiduciary rule, including the Best Interest Contract Exemption (BICE). The BICE requires a written contract for certain types of financial advice and was originally scheduled to take effect starting Jan. 1, 2018, but will now be delayed until July 1, 2019.

The DOL said it will not pursue enforcement actions against fiduciaries “working diligently and in good faith to comply” with the fiduciary rule during the 18-month transition period.

Despite this most recent delay, portions of the rule are in effect. As of June 9, 2017, and through the 18-moth transition period, insurance agents and brokers who sell and service products impacted by the rule are required to adhere to “impartial conduct standards.” The standards specifically require advisers and financial institutions to:

• Give advice that is in the “best interest” of the retirement investor.
• Charge no more than reasonable compensation.
• Make no misleading statements about investment transactions, compensation and conflicts of interest.

The Big “I” will continue to keep members updated as the regulatory process progresses.

Jennifer Webb is Big “I” federal government affairs counsel.