The Protecting Advice for Small Savers (PASS) Act of 2017, which aims to repeal the Department of Labor (DOL) conflict of interest rule, has passed the House Financial Services Commission.
The bill seeks to establish its own best-interest standard for broker/dealers (B/Ds), while moving all fiduciary rule-making powers to the Securities Exchange Commission (SEC) and away from the DOL.
It also means to erase “related prohibited transaction exemptions published April 8, 2016.”
The DOL’s conflict of interest rule heightens the fiduciary standard for virtually anyone providing retirement-plan investment advice, including recommendations to do with rollovers from employer-sponsored retirement plans to individual retirement accounts (IRAs).
After clearing a series of legal hurdles, the DOL’s fiduciary rule began implementation on June 9 of this year. However, the DOL and the White House have seemingly agreed to extend the applicability date until January 1, 2019.
All fiduciaries are required by law to act in the best interests of plan participants. However, critics argue, the DOL’s rule also places significant compliance burdens on advisers; as a result, it may minimize access to financial services for lower-income Americans. Industry group the Financial Services Institute (FSI) said today in a statement, “The PASS Act paves the way for a best interest standard for financial advice created by the SEC, something we have long supported, while ensuring investors continue to have access to affordable, objective financial advice as well as a wide array of products and services to assist them in saving for a secure retirement.”
In the midst of the ongoing regulatory battle, several firms continue rolling out new resources to help advisers leverage technology to comply with ongoing changes.
During a panel at today’s 2017 PLANADVISER National Conference (PANC), industry attendees discussed how they are structuring their business models in response to the fiduciary rule.
In the meantime, the PASS Act of 2017 is on its way to the House. More information on the bill or H.R. 3857 can be found at the Wagner.House.Gov.