The push to delay implementing key fiduciary rule provisions by 18 months is one step closer to reality.
The Office of Management and Budget
Industry trade organizations had been lobbying the Trump administration to repeal what they see as the most onerous aspects of the fiduciary rule, particularly parts of the best interest contract exemption that permit clients to file class action lawsuits.
The Labor Department's proposal would push the implementation date for the BIC exemption as well as enforcement provisions to July 1, 2019 from January 1, 2018.
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The Labor Department is receiving a deluge of feedback from advisers and investors on whether to revise its controversial regulation.
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The department is asking the Office of Management and Budget to postpone the compliance date for 18 months for the best interest contract exemption and other aspects of the rule.
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The rule has cost the firm tens of millions of dollars in compliance and lost revenue.
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The length of the delay, however, was a surprise to some industry watchers and fiduciary advocates.
"I think it was widely expected that the DoL would extend the final implementation date past Jan. 1, but 18 months is a very long time to consider changes to a rule that has been in the works for six years," Duane Thompson, senior policy analyst at Fi360, told Financial Planning earlier this month.
In February, President Trump instructed the Labor Department to review the fiduciary rule with an eye to rescinding the regulation in whole or in part.
Secretary of Labor Alexander Acosta ultimately opted to let the first phase of implementation go forward in June, but is pursuing Trump's requested review.
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The department is embroiled in a lawsuit brought by Thrivent Financial for Lutherans, which is challenging the legality of the regulation's class action provision. Thrivent Financial argues that arbitration is better for its members.
Fiduciary advocates, however, contest that enabling clients to pursue class action lawsuits is a necessary tool to hold firms accountable.