Momentum seems to be building among House Democrats to raise questions regarding the Department of Labor’s (DOL’s) proposed fiduciary rule.
A letter circulated last week asks the DOL to make what the Democrats call “improvements” to the rule. Originally signed by nine House Democrats, that number has since grown to 90 lawmakers, Eric Harris, press secretary for Rep. Gwen Moore, D-Wis., said today. Moore has spearheaded the effort.
The DOL is accepting comments until the end of the day Thursday, and expects to publish a final rule likely early in 2016, observers have said.
Barbara Roper, director of investor protection for the Consumer Federation of America, which supports a tougher rule, said several of the letter signers have outright opposed a fiduciary-only rule in the past. She said the suggestions proposed in the Democrats’ letter could be easily adapted by the DOL.
“The Department of Labor has already indicated that it is looking at many if not all of the substantive issues raised here,” she said in an email to InsuranceNewsNet. “Far from indicating a loss of momentum, the letter suggests to me that there is likely to be little Democratic support for efforts to kill or delay the rule through the appropriations process.”
Thus far, the fiduciary-only fight has pitted Republicans against the DOL and the White House, which claims retirement investment advice is costing Americans $17 billion annually. The GOP is working to defeat the rule on several fronts, and courting Democratic support is one avenue.
Roper added she is “cautiously optimistic” that the rule will be finalized.
“DOL isn’t going to back down unless Congress makes them, in my opinion, and we see less and less Democratic support for any such efforts,” she said.
In the letter, Democratic House members called on the DOL to convene “a small working group of industry professionals and consumer advocates” to help finalize the rule. Also, the letter asks for a “good faith implementation” period to allow those who work with retirement plans “to comply with the rule without the threat of lawsuits.”
The Democrats emphasized that they favor a fiduciary only rule – with modifications.
“We believe the department could accomplish the goals of the (best interest contract exemption) using a less prescriptive and more principle-based approach to implementation,” the letter states.
The lawmakers also said the rule should permit specific investment examples in investor-education materials, and should not restrict access to annuities.
The up‐front costs associated with setting up an annuity may be higher than other retirement options, such as a mutual fund, the Democrats noted. But the guarantee offered by the annuity is a value to consumers “not offered by other, lower cost options.”
When those costs are amortized over the life of the annuity, it may “bring the costs in line with options that initially appeared cheaper,” the letter reads. “The (DOL) should, therefore, take steps to clarify that the Rule does not disadvantage lifetime income options.”
Meanwhile, a DOL spokesman said that a formal letter has not yet been received, while adding that letters such as this are an important part of every notice and comment rulemaking. He noted that "members of Congress understand how important it is to ensure their constituents are receiving retirement investment advice that is in their best interest."
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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