The Department of Labor has suggested a clause in its retirement-savings rule banning firms from using a class-action waiver requirement will eventually be scratched before the rule takes effect in the summer of 2019.
President Donald Trump signed an executive order in February ordering the DOL to undertake an economic and legal review of the fiduciary rule, which prompted the department to delay the April 10 implementation date to June 9. But recently, the DOL submitted a proposal to the Office of Management and Budget to delay the January 1 applicability date of the rule until July 1, 2019.
The latest statement by the DOL suggests additional changes to the rule are on the horizon during that delay.
In a letter on Wednesday to Judge Susan Richard Nelson of the U.S. District Court for the District of Minnesota presiding over a lawsuit against the fiduciary rule, the DOL said the provision “will likely be mooted in the near future.”
The DOL also argued in the letter that a stay of litigation was “the most efficient way to address this claim regarding a provision that is not currently applicable” to the insurance company that brought the case against it.
Thrivent Financial for Lutherans filed the case against Secretary of Labor R. Alexander Acosta and the DOL last September. The insurance company claimed the class-action waiver requirement under the DOL rule’s best-interest contract exemption, or BICE, would prohibit the firm from doing certain business and discontinue handling member disputes amicably and privately through mediation and arbitration.
Nelson instructed the parties to meet and submit a joint letter regarding “the possibility of a nonenforcement agreement that gives Thrivent complete relief from the threat of enforcement.” But according to the letter sent by DOL, after counsel from both parties discussed the joint letter over the phone, the two sides could not come to an agreement on it.
In response, the DOL asked for a stay of litigation, or that the case be halted.