Hours after the Employee Benefits Security Administration (EBSA) announced that it will be reissuing a proposal to update the definition of fiduciary, industry leaders began to express their approval (see “EBSA to Re-Propose Definition of Fiduciary Rule”).
Bradford Campbell, former head of EBSA from 2006 to 2009 and currently with Schiff Hardin LLP, said he is “very pleased” with today’s announcement. “Rushing to a final rule would have been bad regulatory process, embroiling the Department in extensive litigation. The bottom line is that DOL has not made the case for its original proposal. The bipartisan calls to repropose the rule reflect this reality. The burden is on the Department to justify its efforts to fundamentally change the rules governing trillions of dollars of workers’ savings, and I applaud Assistant Secretary Borzi for her decision,” he said in a statement.
The Securities Industry and Financial Markets Association (SIFMA) also issued a statement approving of EBSA’s action: “Since the beginning, we have raised significant concerns about the proposal and lack of cost-benefit analysis on a rule that would affect millions of IRA holders and plan participants. We appreciate the Department’s announcement that they indeed will conduct further economic analysis and make changes that will be included in the new proposed rule.”
The Financial Services Institute (FSI) saw the announcement as a victory: “The rule, as proposed, would have serious negative consequences for Main Street Americans in need of retirement advice. This is a major victory for… millions of hard-working Americans who need affordable, unbiased financial advice.”
Lawmakers also weighed in on the announcement. Senator Tom Harkin (D-Iowa), Chairman of the Senate Health, Education, Labor and Pensions Committee (HELP), and Representative George Miller (CA-7), Ranking Member of the House Education and Workforce Committee, applauded the decision to issue a new proposal as well, but also said the DoL must move forward: “[T]he simple fact is that bad investment advice threatens the retirement security of middle class Americans. The Department deserves a lot of credit for its efforts to hold advisers to the fiduciary standard Congress intended while taking into consideration the realities of a mature retirement industry. We urge the Department to move forward without delay on reproposal that will provide significantly increased protections for Americans concerned over their retirement security while being both practical and easy to manage.”
In its announcement, EBSA said a new proposal won’t be issued until 2012.