The U.S. House of Representatives today will vote on a spending bill that contains key amendments restricting funding for the Department of Labor’s (DOL) recently proposed fiduciary rule.
H.R. 5894, or otherwise known as the Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, is sponsored by Rep. Robert Aderholt (R-AL), and contains three amendments made by Republican state representatives that would deter funding to the Biden Administration’s latest proposal.
The first amendment, created by Rep. Rick Allen (R-GA), would restrict any funds made available by the legislation to be used to finalize, implement, or enforce the proposed rule or any substantially similar rule.
Another amendment by Rep. Ann Wagner (R-MO) prohibits the DOL from using funds to finalize, implement, or enforce proposed amendments to class prohibited transaction exemptions (PTEs) available to investment advice fiduciaries.
The last amendment, introduced by Rep. Ralph Norman (R-SC), would prohibit funding to carry out the actions described in the fact sheet released by the White House, which included a proposal to crack down on “junk fees” in retirement investment advice.
The House is expected to make its first votes starting at 10:30 a.m. ET, and will conclude last votes at 4:20 p.m. ET.
The DOL proposed the retirement security rule on October 31, following weeks of speculation and even calls from GOP lawmakers to halt further action on the proposal.
Under the new proposal, investment advisors would have to “adhere to high standards of care and loyalty when they make investment recommendations and avoid recommendations that favor their financial and other interests at the expense of retirement savers,” according to the DOL and the Biden Administration.
Furthermore, the updated definition of an investment advice fiduciary would apply when financial services providers give investment advice for a fee to retirement plan participants, individual retirement account owners and others.
It’s a proposal that the government says would further suppress “junk fees,” but one that the insurance industry contends would deter legitimate compensation from advisors.
The DOL has since opened its commentary period on the 500-page proposal, but industry trade groups are advocating for further extensions. Under the current 60-day period, advocates and critics have until January 2, 2024, to write comments on the proposal.
SEE ALSO:
- Financial Groups Request Comment Period Extension for DOL Retirement Security Rule Proposal
- DOL Fiduciary Rule Released; Industry Reaction Pours In
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
A main concern is the over-stepping of this rule by the federal agencies rather than allow states to dictate parameters of this proposed rule-change. The “junk fee” terminology reads more like an impetus for the DOL (and other corresponding agencies) to step-up their direct oversight of services provided and reviewed by state-agencies. The pushback of this ruling (by legislators who should be making law, not agencies) makes sense, from that regard.
2 other questions:
Why the shortened review period (typically, it is longer than 60-days *and* extensions are typically granted)?
Is there not already a fiduciary standard applied, why force redefinition of state-governed policies?