Bowing to industry pressure, the Labor Department on Monday
extended the non-enforcement policy on its fiduciary rule to Jan. 31.
Also, Labor “further extended the requirement for providing
the ‘specific reasons’ that justify a rollover recommendation” until June 30,
explained Fred Reish, partner at Faegre Drinker’s Los Angeles office, in a
Monday email to reporters at BenefitsPRO’s sister publication, ThinkAdvisor.
Labor said in announcing the extension in a field assistance
bulletin that it understands that the Dec. 20, 2021, expiration date of the
temporary enforcement policy “poses practical difficulties for financial
institutions that are in the process of complying with the exemption
conditions. Specifically, financial institutions have expressed concern that they
would incur significant additional distribution costs, because the Dec. 20,
2021, expiration date does not align with their regular distribution cycle for
disclosures.”
Industry trade groups have been urging the Labor Department
to extend the Dec. 20 compliance date for its fiduciary advice rule. The Biden
administration allowed the Trump administration’s fiduciary prohibited advice
exemption, or PTE, to go into effect in mid-February.
The regulation, called “Improving Investment Advice for
Worker & Retirees,” is “broadly aligned” with the SEC’s Regulation Best
Interest, according to EBSA.
However, Labor Secretary Marty Walsh said in mid-June that
Labor plans to issue a new proposed rulemaking to update the definition of
“fiduciary” under the Employee Retirement Income Security Act. That proposal
could come by December.
Lisa Gomez, President Joe Biden’s pick to head the Labor
Department’s Employee Benefits Security Administration, told senators on Oct. 7
that “there’s nothing that is more central to ERISA than defining who is a
fiduciary.”
In comments during her confirmation hearing before the
Senate Health, Education, Labor and Pensions Committee, Gomez — who will be
central in helping Labor craft a new fiduciary rule — said that if confirmed,
she looks forward to working with the Securities and Exchange Commission as
well as with Labor “to be briefed on the efforts of looking at the definition
of a fiduciary in different contexts, and taking another look at the conflict
of interest rule and how it would apply in different situations.”
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