In a letter to Speaker of the House Paul Ryan, R-Wisconsin, and House Minority Leader Nancy Pelosi, D-California, Investment Company Institute (ICI) President and CEO Paul Schott Stevens said that Congress should continue advancing bipartisan legislation to adopt a best interest standard in law, rather than through the “cumbersome contractual regime” imposed by the Department of Labor (DOL) in its final fiduciary rule.
Stevens wrote to support H.J. Res. 88, introduced by Reps. Phil Roe, R-Tennessee, Charles Boustany, R-Louisiana, and Ann Wagner, R-Missouri.
Stevens said the Institute strongly endorses the principle that financial professionals should act in the best interest of their clients when offering personalized investment advice, and that other bipartisan legislation already advancing in the U.S. House of Representatives is the appropriate way to implement this principle. “Such legislation has the distinct advantage of imposing a best interest standard through changes in the law, rather than through the cumbersome contractual regime contrived in regulations by the Department of Labor. The legislation would impose broad, strong statutory protections for savers seeking financial advice, without introducing the extreme complexity inherent in the Department’s rule,” Stevens wrote.
Stevens noted that while the DOL’s final rule reflects a number of modifications, the basic structure of the proposed rule remains intact. “Like the proposed rule, the final rule imposes significant new liability through a complicated, back-door regulatory regime that will have the effect of limiting available advice options for many savers,” he wrote, contending that implementation of the rule will make it more difficult for low- and middle-income Americans to save for retirement. He said small businesses, in particular, will find it more difficult to offer their employees saving opportunities.
Steven’s letter can be viewed here.
A resolution has also been introduced in the U.S. Senate to stop implementation of the new fiduciary rule.