Fiduciary Rule Delayed 60 Days In Advance Of Being Delayed Forever

The Fiduciary Rule-part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which sought to prevent the corrupt practices that led to the financial crisis of 2008-has faced delays before.

On Feb. 3, President Donald Trump directed the Labor Department to delay implementation of the rule for further review "to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice".

The measure, titled "Conflict of Interest Rule - Retirement Investment Advice" but commonly referred to as simply the "Fiduciary Rule", defines investment advisers as fiduciaries, meaning they must trade and adjust portfolios as if their customers' assets were their own, and seeks to avoid conflicts of interest by mandating that the advisers disclose all of their fees and commission earnings to clients. The rule was originally scheduled to take effect on April 8.

The DOL is seeking a 60-day delay of the rule, to June 9.

The controversial rule would expand the definition of fiduciary. The Labor Department first introduced it in 2010, but the efforts have faced fierce resistance from industry groups and financial firms that argue it could raise legal costs for firms and leave savers with fewer choices.

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The delay also would apply to related prohibited transaction exemptions, including the Best Interest Contract Exemption, that the agency issued along with the rule in April 2016.

Republicans said the rule would make it more hard for those with middle incomes to get retirement advice.

Kenneth Bentsen, SIFMA president and CEO, said, "The delay will allow the new administration an opportunity to review the rule's impact on investors and the market, while providing firms additional time to prepare for potential changes to the rule".

The public will have 15 days from the publication of the proposed delay in the Federal Register on Thursday to comment on the delay itself before the Labor Department can formalize it. "We are already seeing the negative consequences of the rule on the marketplace with some firms announcing that they will no longer offer certain products".

  • Toni Ryan