DOL Rule Not Carved in Stone, Experts Say

The fiduciary standard will take effect June 9 for anyone working with retirement funds, but the fight is far from over.

Options remain down the line to amend the rule, or even write a new regulation.

Although the efforts may be time consuming, depending on which route the DOL chooses, literally all avenues remain open to Labor Secretary Alexander Acosta. That's the word from Seth Safra, partner in the Employee Benefits & Executive Compensation Group at Proskauer, an international law firm.

“The department has a lot of authority in this area,” he said.

The DOL did not return multiple messages for this story.

While the fiduciary standard will take effect June 9, the DOL could amend it or write a new regulation. Safra said. Doing so would require following the Administrative Procedures Act guidelines for public notice and comment.

In an op-ed announcing his decision to let the rule take effect, Acosta remained defiant and vowed to eliminate harmful government regulations.

The DOL has more leeway with the Best Interest Contract Exemption, slated to take full effect Jan. 1, 2018. The BICE requires hefty disclosures and a signed contract that establishes a private right of action for clients to sue.

The DOL could amend the more onerous aspects of the BICE, Safra said. If the department isn’t satisfied with studies in support of any amendments, it could publish a delay to push back that Jan. 1 deadline, he added.

“Or they could also just propose fresh-off-the-shelf prohibited transaction exemptions,” Safra said. “They have broad authority to grant prohibited transaction exemptions.”

Several industry organizations vowed to continue the fight to revise the rule to protect small savers who could be overlooked if the full fiduciary rule goes into effect.

“As currently written, the regulation limits retirement savers’ access to education and information about annuities, the only financial products in the marketplace that guarantee lifetime income,” read a statement by Dirk Kempthorne, president and CEO of the American Council of Life Insurers.

“ACLI supports reasonable and appropriately tailored rules that require all sales professionals to act in the best interest of their customers. The fiduciary regulation unfortunately does not meet this standard.”

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].

© Entire contents copyright 2017 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

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]. Follow him on Twitter @INNJohnH.