The department on Sept. 8 submitted its proposal — "conflict of interest in investment advice" — for review to the Office of Information and Regulatory Affairs within the White House's Office of Management and Budget.
In its latest regulatory agenda, the department said the rule would take into account "practices of investment advisers, and the expectations of plan officials and participants, and IRA owners who receive investment advice, as well as developments in the investment marketplace, including in the ways advisers are compensated that can subject advisers to harmful conflicts of interest."
Also, it will "evaluate available prohibited transaction class exemptions and propose amendments or new exemptions to ensure consistent protection of employee benefit plan and IRA investors," the department said in its agenda.
In her written responses, Su said the department is coordinating with the Treasury Department and IRS and separately working with the Securities and Exchange Commission to ensure that any new fiduciary rule appropriately reflects the changes that the financial services industry has made to comply with the SEC's Regulation Best Interest. The SEC's rule package, known as Reg BI, took effect in 2020 and was designed to address the obligations of broker-dealers and investment advisers when they provide recommendations or investment advice to retail investors, including rollover recommendations. Reg BI's centerpiece best-interest standard aims to compel brokers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts.
The review process for the department's proposal can take up to 90 days but is unlikely to take that long.
"We are looking forward to engaging with the public on this issue and aim to balance the interests of the regulated community and those they serve," Su said. "It is important that we ensure the security of the retirement, health and other workplace-related benefits of America's workers, retirees, and their families."
Separately, Su was asked about the department's Employee Benefits Security Administration's investigation practices.
"The agency works hard to ensure that its scarce resources are efficiently and effectively deployed to maximize the positive impact on plans and plan participants and beneficiaries," Su said. "EBSA employs performance measures and indicators that help determine if the enforcement program is effective and efficient."
As of June 30, EBSA had 2,364 civil and criminal investigations open. The average time a civil investigation has been open is 24 months, and the average time a criminal investigation has been open is 36 months, Su said. Also, as of June 30, EBSA had 183 Terminated Vested Participants Project cases open, with an average age of 30 months.
EBSA currently employs about 325 investigators responsible for overseeing a plan universe of more than 3.9 million benefit plans covering 152 million workers, retirees, and their dependents, Su said. "EBSA does extraordinary work with extraordinarily limited resources, but the resource limitations impose large constraints on EBSA's ability to implement a comprehensive and timely investigative program," she added.
In September, Rep. Virginia Foxx, R-N.C., chair of the Education and the Workforce Committee, and Rep. Bob Good, R-Va., chair of the Health, Employment, Labor and Pensions Subcommittee, sent a letter to Su raising concerns that EBSA's investigations into plan sponsors are often lengthy and burdensome.
