The Department of Labor has sent a final rule that would extend the transition period of its fiduciary rule by 18 months to the Office of Management and Budget for review. The rule, if approved by OMB, would delay the Jan. 1 applicability date of the fiduciary rule until July 1, 2019.
“We appreciate the administration’s focus on this rule and are encouraged this critical delay is moving forward,” said David Bellaire, executive vice president and general counsel of the Financial Services Institute. “We will continue to work with the administration, DOL and the SEC on a uniform standard that protects investors as well their access to affordable, quality advice, products and services.”
The OMB has up to 90 days to complete its review. When it’s finished with the review, it will send the rule back to the DOL to be published in the Federal Register.
From the end of August through Sept. 15, the department received 793 public comments on the proposed delay, from investor advocates, financial services firms and other industry stakeholders.
“To characterize what the Department is proposing as a ‘delay’ is simply incorrect,” wrote Barbara Roper and Micah Hauptman of the Consumer Federation of America. “Delay implies that the rule will be implemented at the end of the proposed 18-month delay period. However, that’s clearly not the Department’s intent here. Rather, the intent is to grant what is effectively a revocation of the applicability of the most consequential provisions of the rule, by staying them, with the goal that implementation of these provisions never occurs.”
“Such a delay would provide certainty to investors and the financial services industry, and would prevent the continued expenditure of significant amounts for systems, products or processes required by a Rule and Exemptions that almost certainly will undergo significant changes,” said Lisa J. Bleier, managing director and associate general counsel of the Securities Industry and Financial Markets Association.
The first two prongs of the rule went into effect June 9, one expanding the definition of who is a fiduciary and another establishing impartial conduct standards. But full compliance with the rule was required by Jan. 1.
At the end of June, the DOL issued a request for information, asking for public feedback on what parts of the fiduciary rule should be revised, if any, and whether the Jan. 1 applicability date should be delayed.
President Donald Trump signed an executive order in February ordering the DOL to undertake an economic and legal review of the fiduciary rule. That prompted the DOL to delay the April 10 implementation date to June 9 to complete its analysis.