After rejecting earlier calls for a hearing on its controversial fiduciary rule proposal from Democratic lawmakers as well as retirement industry and consumer advocates, the Department of Labor has had a change of heart.
The DOL’s Employee Benefits Security Administration (EBSA) has scheduled a public hearing for Sept. 3 (possibly continuing on Sept. 4) to “consider issues attendant to adopting a proposed prohibited transaction exemption on Improving Investment Advice for Workers and Retirees.”
“Since publication in the Federal Register, there has been considerable interest expressed regarding the proposed prohibited transaction exemption, as well as several public comments requesting a hearing,” the hearing notice states. “The Department has decided to hold a public hearing on this proposed prohibited transaction exemption to provide commenters an opportunity to present material factual issues that cannot be fully explored through written submission.”
The EBSA says testimony will be limited to individuals or parties who submitted comments or hearing requests on the proposed exemption before the close of the comment period, which was Aug. 6. Requests to testify at the hearing should be submitted to the Department on or before this Friday, August 28.
Requests to testify, including an outline of the issues the speaker proposes to address in his or her testimony, must be submitted through the Federal eRulemaking Portal: www.regulations.gov at Docket ID number: EBSA-2020-0003.
Due to the COVID-19 pandemic, the entire hearing will be held virtually and there will be no in-person testimony. The hearing will be open for viewing to the general public, and registration information for those who wish to view the hearing will be available at www.dol.gov/agencies/ebsa.
The hearing will be organized into panels of witnesses with several witnesses on each panel, with EBSA saying it will not assign panel slots to those whose outlines identify only issues of law. Preference will also be given to parties with similar interests who select a common representative to testify on their behalf, and to parties who requested a hearing (or to participate in a hearing if held) in their written submissions during the comment period.
EBSA says each presenter will be allotted a minimum of 10 minutes. Information about the agenda for the hearing will be posted no later than August 31.
Hearing long sought by opponents
Since it was released by the EBSA on June 29, opponents have urged the DOL to rewrite or withdraw the proposed new PTE, intended to align with the SEC’s Regulation Best Interest. Or at the very least to extend the comment period, which was an unusually short 30 days, to 60 or 90 days.
“The proposed exemption would be broadly available to investment advice fiduciaries who adhere to a best interest standard and plainly inform retirement investors that they are acting as fiduciaries when making investment recommendations,” said Assistant Secretary of Labor for EBSA Jeanne Klinefelter Wilson at the time the PTE was announced. “The proposed exemption would authorize a wide range of investment advice models and relationships, consistent with the fundamental goal of ensuring that workers and retirees receive investment advice that is in their best interest.”
The proposed rule has two major features. First, the rule reaffirms the five-part test for determining whether a person renders investment advice for purposes of ERISA. Second, the rule sets forth a new prohibited transaction class exemption for investment advice fiduciaries that is based on the “impartial conduct standards,” which were generally adopted as a temporary policy after the prior iteration of the fiduciary rule was vacated.
Sen. Patty Murray (D-WA), ranking member of the Health, Education, Labor and Pensions Committee, had requested a hearing on the issue in July, but was denied earlier this month by Joe Wheeler, deputy assistant secretary for Labor, who said a public hearing was unnecessary because the proposed PTE is much narrower in scope than the vacated fiduciary rule.
Murray was among a group of Democratic Senators who sent Secretary of Labor Eugene Scalia a letter opposing the proposed rule on Aug. 6, calling it “an outdated and loophole-ridden standard that allows unethical advisors to cheat their retirement clients without providing the American public an opportunity to comment.”
SEE ALSO:
- DALBAR Warns of Hidden Burdens Related to Rollovers in New DOL Rule
- Fake Fiduciary Rule Comments Spur Senators to Question DOL’s Scalia
- Democrats Slam Trump, DOL’s Fiduciary Stance
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
