DOL Prepares for Fiduciary Rule Delay

The Department of Labor (DOL) announced this week that it will not take enforcement action against companies that do not comply with the new fiduciary rule if the department is unable to finalize a proposed 60-day delay to the rule taking effect.

Earlier this month, the DOL released a proposal to delay implementation of the fiduciary rule for 60 days. The rule is currently scheduled to begin taking effect on April 10 but, under the proposal, would not take effect until June 9. The Big “I” supports the proposal, but submitted comments suggesting a longer delay is necessary.

The new guidance means if the proposed 60-day delay does not take effect before April 10, the DOL will not initiate enforcement actions during the gap period. Furthermore, if the DOL does not issue a 60-day delay, agents, brokers and financial institutions won’t be penalized for missing the April 10 deadline, as long as they comply with the fiduciary mandates within a reasonable amount of time, according to the DOL.

The DOL indicated it intends to issue a delay prior to April 10, but advised avoiding “investor confusion and related marketplace disruptions attributable to uncertainty regarding the timing of the department’s decision.” Some financial companies and the Chamber of Commerce are also seeking an emergency injunction of the April 10 deadline in federal court.

The proposal to delay the rule is a response to a memorandum President Trump issued in early February, directing the DOL to review the rule to “determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.” The proposed delay is intended to give the DOL more time to undergo this review. If the DOL determines that the rule will adversely impact retirement savers, then it will likely publish a notice to rescind, amend or further delay the rule.

The fiduciary rule is a 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 to adhere to a fiduciary standard of care.

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