A new fiduciary rule will take effect June 9 as scheduled, with full implementation by Jan. 1, the Department of Labor said late Monday.
The DOL also pledged to not pursue claims against fiduciaries working in good faith to comply with the rule and provisions, “or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions” during the phased implementation period, the agency said in an enforcement bulletin.
The announcement referenced a Feb. 3 memorandum from President Donald Trump ordering the DOL to examine whether the new rule would adversely affect access to retirement saving advice and to conduct a new economic and legal analysis of its likely impact. “It is possible, based on the results of the examination, that additional changes will be proposed to the fiduciary duty rule” and related exemptions, the DOL said, promising to issue a request for information ”in the near future” to get public input on specific ideas for possible new exemptions or regulatory changes.
Dennis Kelleher, president and CEO of the non-profit advocacy group Better Markets, in a statement called the announcement “a great victory for Americans saving for retirement.” Mr. Kelleher said Labor Secretary Alexander Acosta “admitted that there is no legal basis to delay the best-interest rule,” and acknowledged that Trump administration officials “have to follow the rule of law in deregulating just as President Obama and everyone has to follow the rule of law when enacting regulations.”
Undoing the rule would involve proposing and finalizing a new one after a public comment period.
Mr. Acosta said in a May 23 opinion piece released by the DOL that while his agency will seek further public input on how to revise the entire rule, officials there “have found no principled legal basis to change the June 9 date.”
“Respect for the rule of law leads us to the conclusion that this date cannot be postponed,” he wrote, adding that he hopes the Securities and Exchange Commission “will be a full participant” in that review.
Kenneth E. Bentsen, Jr., president and CEO of the Securities Industry and Financial Markets Assocaition, said in a statement: “SIFMA has long supported the creation of a best interest standard for brokers who provide personalized investment advice, and we continue to believe that the SEC is the appropriate regulator to do so.”
“While we are disappointed that the Department of Labor has chosen not to further delay the rule until the department has completed a review of the entire rule’s impact on investors, we appreciate Secretary Acosta's recognition of the rule's negative impact and his desire to seek public input,” he added.