Delay implementation of DOL Fiduciary regulations
As reported by Reuters, President Trump on Feb. 3, 2017, signed an executive order that will delay implementation of fiduciary regs issued by the Department of Labor (DOL) for 180 days. The fiduciary rule was originally slated to take effect in Apr. 2017. During the delay, DOL is to conduct an economic and legal analysis of the regs and rescind them if the regs are inconsistent with Trump administration priorities, according to a draft memo seen by Reuters.
The DOL fiduciary regs: address what constitutes fiduciary advice; require more retirement advisers to act in their client’s best interest first; clarify what does and does not constitute fiduciary advice; allow firms to accept common types of compensation, if the firms commit to putting their client’s best interest first under a best interest contract exemption; and ensure that advisers are held accountable to their clients if they provide advice that is not in their clients’ best interest.
According to Reuters, the U.S. Chamber of Commerce and other trade groups are seeking to have the DOL fiduciary regs overturned in court, and a federal judge reviewing the case signaled in a Feb. 2, 2017 court filing that she plans to issue a decision no later than February 10. Democrats and consumer rights groups say the rule is necessary to protect individuals against potential conflicts of interest that brokers may have when guiding consumers to invest for the future.
The President’s executive order is not the first time that Republicans have tried to repeal DOL fiduciary regs. In January 2017, the Protecting American Families’ Retirement Advice Act, which would delay implementation of the DOL fiduciary regs by two years, was introduced. In September 2016, the House Financial Services Committee passed the Financial CHOICE Act, which would have repealed the DOL fiduciary regs.
In May 2016, Congress passed a joint resolution disapproving and nullifying the DOL fiduciary regs (H.J. Res. 88), but President Obama vetoed the resolution, and the House failed to override the veto. With Republicans now in control of Congress and the Presidency, delay of enactment—or repeal—of the DOL fiduciary regs would seem to be a foregone conclusion.