While a pair of House committees picked apart the Department of Labor’s (DOL’s) fiduciary proposal today, a department undersecretary said the rule will be changed.
Speaking to Investment News, Deputy Assistant Secretary Timothy Hauser said the feedback from thousands of comment letters will be reflected in the final rule. A DOL spokesman did not return a call seeking further comment.
The DOL rule provided the backdrop for a House Financial Services Committee discussion of the Retail Investor Protection Act (RIPA). This piece of legislation was introduced by Rep. Ann Wagner, R-Mo., as an alternative to the DOL rule.
Wagner's legislation would prohibit the Labor Department from instituting new rules governing financial services before the Securities and Exchange Commission (SEC) reviews the proposed regulations.
The bill has the support of both Democrats and Republicans on the committee.
Meanwhile, the House Ways and Means Subcommittee on Oversight conducted a two-hour hearing on the DOL fiduciary rule. Chaired by Rep. Peter Roskam, R-Ill., the panel featured five opponents of the rule, and Damon Silvers, director of policy and special counsel for the AFL-CIO, who supports the DOL proposal.
Among individual retirement account investors with less than $25,000 in savings, 98 percent choose to go through a broker/dealer, Roskam said in his opening statement.
“The fiduciary rule puts the government in the driver’s seat, allowing bureaucrats to pick and choose how people invest their paychecks,” he added. “What we should really be focusing on in this whole situation are the Americans who aren’t saving for a secure retirement adequately.”
The GOP committee members said the rule threatens small savers and will make it harder for them to get access to sound retirement advice. In addition, they say the rule will force costly compliance mandates on anyone who deals with retirement accounts.
The panel makeup left Silvers to answer committee members’ questions on why a fiduciary-only standard makes sense. That led to many exchanges such as this one between Silvers and Rep. Patrick Meehan, R-Pa.
Meehan: “Do you think every investment advisor starts off with the idea, ‘How can I rip off a client?’”
“We do not make the laws of this nation with the best of us in mind, or the worst of us,” Silvers replied.
The DOL is considering changes that will simplify the mechanics and timing of the contract, Hauser told Investment News. The types of assets allowed in retirement accounts, changing how the contract applies to existing clients and giving firms more time to comply with the new rule are all areas under review, he added.
The DOL closed a second public comment period Sept. 24. A final rule is expected from the DOL early next year. Any delays hamper the DOL’s chances of getting a rule done in time. The Obama administration has said it wants to pass the rule before the president leaves office in January 2017.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org.
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