Lawmakers for the Senate Committee on Health, Education, Labor, and Pensions (HELP) are pushing the Department of Labor (DOL) to stop further action on the pending fiduciary rule.
In a letter addressed to Acting DOL Secretary Julie Su, Senator Bill Cassidy (R-LA) and Rep. Virginia Foxx (R-N.C.) say they oppose the DOL revising the definition of fiduciary in section 3(21) of the Employee Retirement Income Security Act of 1974 (ERISA).
Cassidy and Foxx argue that the DOL had supported three separate definitions on what it means to be an investment advice fiduciary over the past two years and had thus “created unnecessary instability for retirement plans, retirees, and savers.”
“The Department’s misguided efforts to revise the definition of investment advice fiduciary have created confusion in the marketplace and unwarranted compliance expenses,” wrote Cassidy and Foxx.
They specifically point to a recent opinion by the U.S. District Court for the Southern District of New York, in which the court had criticized the DOL for its “shifting interpretations on fiduciary investment advice” and added “there is no DOL interpretations binding on this court.”
Cassidy and Foxx further contend that the last time the DOL had attempted to renew the fiduciary rule in 2016, it was vacated by the U.S. Court of Appeals for the Fifth Circuit two years later in 2018.
“As Biden’s DOL continues to change its stance in this area, we remind the Department of its attempt to promulgate a definition of fiduciary under ERISA section 3(21) in 2016 (the “2016 Fiduciary Rule”),” the two added. “This ill-conceived and overreaching rule was decisively vacated by the U.S. Court of Appeals for the Fifth Circuit, 5 and it should serve as a cautionary example.”
Ultimately, the lawmakers conclude their letter by requesting that the DOL “cease further action” on the rulemaking.
Fiduciary rule coming?
Cassidy and Foxx’s message comes as the DOL is expected to soon issue a new fiduciary rule.
While all eyes were on the Department to release a new proposal in August, Lisa Gomez, assistant secretary of Labor for the Employee Benefits Security Administration (EBSA) previously said that issuing a new rule was a great priority for the DOL.
According to the DOL’s Spring Regulatory Agenda, the proposal would amend the regulatory definition of a fiduciary, in an effort “to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs [individual retirement accounts] are fiduciaries within the meaning of section 3(21) of ERISA [Employee Retirement Income Security Act of 1974] and section 4975(e)(3) of the Internal Revenue Code.”
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