The never-ending story of the Department of Labor’s efforts to implement and enforce a fiduciary rule could soon roar back to life—with the DOL signaling September 2019 as the target.
Appearing on the Office of Information and Regulatory Affairs website, the department says it’s considering regulatory options in light of the Fifth Circuit opinion, which vacated the DOL’s new regulatory definition of a fiduciary.
On April 8, 2016, the Department replaced the 1975 regulation with a new regulatory definition. The Fifth Circuit Court of Appeals struck it down last March.
What the new set of regulations will entail is yet to be determined, with 09/00/2019 listed as the date for the final rule.
The fiduciary rule, officially known as the Department of Labor’s Conflict of Interest Rule, has occupied industry advocates and opponents since its reintroduction in April 2016 under Phyllis Borzi and the DOL’s Employee Benefits Security Administration.
As part of the Trump Administration’s regulatory rollback overall, the Department of Labor under Labor Secretary Alexander Acosta and new EBSA Assistant Secretary Preston Rutledge delayed the rule’s full implementation until July 1, 2019.
The court then vacated the rule entirely, sending shock waves throughout the investment and retirement savings industries.
The court, citing arguments made by plaintiffs groups—including the U.S. Chamber of Commerce, Financial Services Institute, and the Financial Services Roundtable, among others—said in its opinion that “…we REVERSE the judgment of the district court and VACATE the Fiduciary Rule in toto.”
“As might be expected by a Rule that fundamentally transforms over fifty years of settled and hitherto legal practices …a full explanation of the relevant background is required,” the judges wrote before launching into a comprehensive explanation of just that, beginning with a Congressional passage of ERISA’s in 1974.
The SEC is currently working on its own version of a fiduciary standard.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
