Delay Seems Likely, But Confusion Remains on DOL Fiduciary Rule Future

Conflicting media reports have started to circulate, some to the effect that a delay of the DOL fiduciary rule has already been effectuated—others that are more skeptical this is even possible. 

By John Manganaro | January 23, 2017
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It is more or less standard practice that an incoming U.S. President will move to halt or delay a predecessor’s unfinished regulatory projects—particularly when there is a shift in the party controlling the executive branch.  

What is less clear is how much power a newly minted president has to overturn straggling regulations that already went through the full proposal/comment/finalization process under the previous POTUS—which are simply waiting on staggered implementation deadlines to fully take effect. Further complicating the picture will be the millions, if not billions, of dollars that the affected industry will have spent to meet the hurdles established by the fully finalized regulation.

This is just the environment overhanging the Department of Labor’s (DOL) longstanding effort to strengthen the fiduciary standard as applied under the Employee Retirement Income Security Act (ERISA). The new fiduciary rule was finalized in June 2016, but it includes implementation deadlines stretching out into 2018, with the first roughly 10 weeks away. 

Since President Donald Trump finished his transition into power in the last week, many industry experts—attorneys, lobbyists and advisers—have opined that the fiduciary rule is most likely doomed. This is despite the fact that the advisory and investment industries have spent significant sums to bring business models, investing tools, sales practices and more into compliance.

The latest move in the more-than-decade-long fiduciary rule saga came Friday, when Politico published a copy of a White House memo issued January 20 by Reince Priebus, assistant to the President and chief of staff. The order has caused some conflicting interpretations among ERISA attorneys and others focused on the subject matter in that it clearly orders federal agencies to halt their work on rules that have not yet been made effective by being published in a finalized version in the Federal Register—at least until a Trump-appointed agency head grants a review and approval. It also seeks, “with respect to regulations that have been published [in final form] … but have not taken effect, as permitted by applicable law, to temporarily postpone their effective date for 60 days from the date of this memorandum.”

The order to executive agency heads continues: “Where appropriate and as permitted by applicable law, you should consider proposing for notice and comment a rule to delay the effective date for regulations beyond that 60-day period. In cases where the effective date has been delayed in order to review questions of fact, law, or policy, you should consider potentially proposing further notice-and-comment rulemaking.”

NEXT: Memo sees various interpretations