The Department of Labor sent its fiduciary rule to the Office of Management and Budget Thursday, signifying its intent to publish a rule before President Barack Obama leaves office.
OMB can take up to 90 days to review the rule, during which time the contents remain under wraps. After the agency signs off, the DOL will release the final rule publicly.
OMB reviews do not typically require the entire 90 days. The timeline means the DOL can publish the rule by mid-April, which will be followed by an eight-month implementation period.
That means the rule would be finalized and on the books by December, a month before Obama leaves the White House.
The DOL proposed new fiduciary rules in April to govern advice provided regarding qualified retirement employer-sponsored plans and individual retirement accounts.
DOL officials and public interest groups say the proposed rules, which would impose a fiduciary standard of care on financial advisors dealing with retirement accounts, are necessary to protect retirement investors from high commissions.
The insurance and financial services industries say the rules will mimic the impact in England, where similar rules have limited small savers’ access to professional financial advice.
There is rampant speculation among industry insiders that litigation will follow publication of the rule in an effort to slow implementation.
“I think there will be litigation,” Fred Reish, a partner at Drinker Biddle & Reath in Los Angeles, told InsuranceNewsNet last month.
One possible legal strategy is to challenge whether the DOL followed the correct steps in trying to publish a rule in such a short timeframe, Reish said. The DOL held two public comment periods, which drew thousands of comments, and a four-day public hearing in August.
Declaring the fight "far from over," Rep. Ann Wagner, R-Mo., said she will continue to push her alternative legislation, the Retail Investment Protection Act, which requires the DOL to defer to the SEC on the fiduciary standard issue.
“The Department of Labor has ignored Congress, thumbed its nose at the thousands of Americans who have expressed concerns about the impact this Rule will have on family savings and jobs, and has charged blindly forward with this executive overreach," she said in a statement. "It’s imperative that we preserve low- and middle-income Americans’ access to sound investment advice and the House passed Retail Investor Protection Act will do just that.”
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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