After an initial balk, the Department of Labor is on board with an 18-month delay of the fiduciary rule’s full implementation, now slated for July 1, 2019.
The official extension was announced Monday, and follows public comment on a proposed extension that was published in August.
“The U.S. Department of Labor has announced an 18-month extension from Jan. 1, 2018, to July 1, 2019, of the special Transition Period for the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24 (PTEs),” the DOL said in a statement.
The extension gives the department the time necessary to consider public comments submitted “pursuant to the Department’s July Request for Information, and the criteria set forth in the Presidential Memorandum of Feb. 3, 2017, including whether possible changes and alternatives to exemptions would be appropriate in light of the current comment record and potential input from, and action by the Securities and Exchange Commission, state insurance commissioners and other regulators.”
“We applaud the DOL’s decision to delay the remaining portions of its fiduciary rule for 18 months,” Dale Brown, president and CEO of the Financial Services Institute, said in a statement. “This delay will allow the DOL to conduct a thorough review of the rule, as ordered by President Trump, to ensure investor choice and access to retirement savings advice is protected. In addition to the rule review, we are encouraged by the DOL’s statement that they will coordinate with other regulators, including the SEC, to simplify and streamline the rule.”
The president directed the department to prepare an updated analysis of the likely impact of the fiduciary rule on access to retirement information and financial advice.
However, the DOL emphasized that during the extended transition period, fiduciary advisors have an obligation to give advice that adheres to “impartial conduct standards.”
These fiduciary standards require advisers to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services, and refrain from making misleading statements.
From June 9, 2017, to July 1, 2019, the Department will not pursue claims against fiduciaries working diligently and in good faith to comply with the Fiduciary Rule and PTEs, or treat those fiduciaries as being in violation of the Fiduciary Rule and PTEs.