A new bill introduced to halt the implementation of the Department of Labor (DOL) fiduciary rule offers a dramatic contrast to the complicated rulemaking due to take effect in April, running less than 200 words in total compared with thousands of pages of rule language.
The measure stands before the House Ways and Means Committee; it provides simply for a two-year delay in the effective date of the rule—ostensibly to give Congress more time to dismantle the conflict of interest rule entirely. Given the recent shift in political power, it stands a much better chance of passage than previous attempts to influence the DOL and could in fact spell the end of the road for the longstanding effort to revamp advice standards under the Employee Retirement Income Security Act.
Introducing the bill, Congressman Joe Wilson (R – South Carolina) described the “Protecting American Families’ Retirement Advice Act” as a necessary step to maintain open access to different forms of financial advice.
“The Department of Labor’s fiduciary rule is one of the most costly, burdensome regulations to come from the Obama Administration,” he suggests. “Rather than making retirement advice and financial stability more accessible for American families, they have disrupted the client-fiduciary relationship, increased costs, and limited access.”
The claims echo many of the “unintended consequences” critics of the rulemaking have warned about since the very beginning. Congressman Wilson has taken up the same warnings despite the fact that many firms have apparently already accepted and embraced the new fiduciary standard as a competitive advantage.
Still, Wilson says his legislation will delay the implementation of a “job-destroying rule … giving Congress and President-elect Donald Trump adequate time to re-evaluate this harmful regulation.”
Congressman Wilson names as supporters of his bill Dirk Kempthorne, president and CEO of the American Council of Life Insurers, who also feels there is a “need for immediate action to extend the April 10th compliance deadline of this rule.”
Tim Pawlenty, CEO of the Financial Services Roundtable, is also cited by Wilson as supporting a delay; however he still believes a “best interest” standard is “common sense.”
“FSR strongly supports requiring companies to act in their customers’ ‘best interest’. That’s just common sense,” Pawlenty is quoted. “However, the current rule is overly complex, involves too much red tape, and is already negatively impacting consumer choice and service. Rep. Wilson’s bill will allow time for a less bureaucratic ‘best interest’ standard to be developed.”
Others cited in support of a fiduciary rule delay include the Insured Retirement Institute; the National Association of Insurance and Financial Advisors; and SIFMA. The full text of the bill is here.