The U.S. House Committee on Education and the Workforce has approved two “bipartisan bills” that would effectively put a halt to the Department of Labor’s (DOL) conflict of interest rulemaking.
The news comes less than a week after the Office of Management and Budget (OMB) confirmed it has formally received and is now reviewing the final fiduciary rule language from the DOL. Perhaps even more important to note than the timing is that conventional political wisdom leaves very little room for a scenario in which the bills could actually make it into law while a Democrat sits in the White House—doubly so because Republicans in Congress made a concerted effort to stop the DOL back in December during a major budget impasse, failing outright. The extraordinary pressures that can emerge in such a budget impasse may well have been Congressional Republicans’ final chance to slow or stop a new fiduciary definition from being enacted before President Obama leaves office.
Investment industry practitioners may recall when the bills were first introduced in late 2015, including the Affordable Retirement Advice Protection Act (H.R. 4293), introduced by Rep. Phil Roe (R-Tennessee N), and the Strengthening Access to Valuable Education and Retirement Support Act (H.R. 4294), introduced by Rep. Peter Roskam (R-Illinois). The complementary proposals “would require financial advisers to serve their clients’ best interests and protect access to high-quality, affordable retirement advice,” according to the lawmakers.
Taken together, the bills would require an affirmative vote by Congress before any final rule by the DOL goes into effect. If Congress fails to approve the department’s regulatory proposal, a new fiduciary standard would take effect that “raises the bar for the retirement services industry by requiring advisers to serve in their clients’ best interests; requires advisers to clearly communicate key information to ensure investors are well-informed to make investment choices; and ensures that individuals and families saving for retirement have access to advice and investment options to meet their individual needs and circumstances.”