More than 50 Democrats in the House voiced their support for the Labor Department’s proposed rule amending the definition of a fiduciary and called for its prompt finalization.
The Retirement Security Rule, commonly known as the fiduciary rule, would alter the definition of an investment advice fiduciary under ERISA, capturing one-time advice, such as rollovers, in the definition if other conditions are met.
Since the DOL proposed the rule in October, industry reactions have varied, though some have called on the Labor Department to withdraw the rule proposal altogether.
In a letter dated April 8, Rep. Maxine Waters, D-Calif., the top Democrat on the House Financial Services Committee, and 55 other Democrats in the House said the rule “is an important step in strengthening critically needed guardrails and protecting working families and retirees from conflicted financial advice.”
The letter is addressed to Acting Labor Secretary Julie Su, Office of Management and Budget Director Shalanda Young, and Richard Revesz, administrator for the OMB’s Office of Information and Regulatory Affairs.
On March 8, the Labor Department sent a final version of its fiduciary rule to the OMB for review, and the clock is ticking for the office to finish its review within 90 days of that date, unless it chooses to extend that time frame. The DOL is expected to finalize the rule soon after the review is completed.
“We applaud the DOL for taking this much needed step and urge the OMB and OIRA to expeditiously complete its review of the rule so that it would become final as close to its proposed form as possible,” the Democratic lawmakers wrote in their letter.
The rule has a deep, complicated history, as the 5th U.S. Circuit Court of Appeals, based in New Orleans, overturned a previous version of the rule in 2018.
The lawmakers commended the department “for keeping this precedent in mind and crafting the 2023 rule to comport with the 5th Circuit’s ruling in order to protect against future legal challenges."
“By closing certain loopholes for investment advice fiduciaries, this rule is estimated to save retirees tens of billions of dollars that they are currently losing every year due to conflicted advice,” the lawmakers wrote.
In late March, nine senators, including eight Democrats and one independent, also urged the OMB and DOL to quickly finalize the rule.
