DOL Fiduciary News: November 3, 2017
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DOL Files Official Delay of Fiduciary Rule
ThinkAdvisor; November 2, 2017
The Department of Labor on Wednesday filed a rule with the Office of Management and Budget for the official 18-month delay of its fiduciary rule.
The rule, which must be approved by OMB, delays the fiduciary rule’s Jan. 1, 2018, effective date until July 1, 2019.
The rule is titled 18-Month Extension of Transition Period and Delay of Applicability Dates; Best Interest Contract Exemption; Class Exemption for Principal Transactions; PTE 84-24.
As proposed, DOL is extending the applicability date of the BIC, 84-24 and Principal Transactions exemptions to July 1, 2019, said Fred Reish, partner in Drinker Biddle & Reath’s employee benefits and executive compensation practice group in Los Angeles. Reish said, "That also means that the transition versions of the exemptions will apply until June 30, 2019. For example, the transition BIC exemption requires that advisors and their financial institutions comply with the Impartial Conduct Standards: the best interest of care, no more than reasonable compensation and no material misleading statements."
Reish adds that "it will be interesting to see if any additional conditions are imposed and whether the nonenforcement policy is extended. However, we won't be able to see the text of the extension until the OMB approves it." He expects OMB "to move very quickly on this [approval], perhaps taking only one or two weeks."
DOL fiduciary: OMB receives rule providing for 18-month delay
InvestmentNews; November 2 2017 @ 10:40 am
The Labor Department has sent a final rule for an 18-month delay of its fiduciary regulation to the Office of Management and Budget for review.
The OMB posted on its website Thursday morning a notice that it had received the delay language from DOL. If the OMB approves the delay measure, which is likely, it will be returned to DOL. The DOL will then release it publicly. It's unclear how long the process will take.
The DOL fiduciary rule, which requires brokers to act in the best interests of their clients in retirement accounts, was partially implemented in June. Under the delay proposal, implementation of the enforcement mechanisms of the rule would be delayed from Jan. 1, 2018, to July 1, 2019, while DOL re-assesses the impact of the rule under a directive from President Donald J. Trump. That review could lead to substantial changes in the remaining parts of the rule.
While the DOL reviews the rule, the Securities and Exchange Commission is working on its own fiduciary rule proposal that would apply to retail investment accounts. The two agencies are cooperating in setting investment-advice standards.