Labor Department sets comment schedule for new fiduciary proposal

The Department of Labor is accepting comments on its new fiduciary proposal through Jan. 2, 2024.

Headed by the "Retirement Security Rule: Definition of an Investment Advice Fiduciary," the DOL published four separate rules Friday in the Federal Register. The remaining three rules deal with exemptions.

An as-yet unscheduled public hearing will take place in about 45 days, the department said in the rule posting.

Administration officials released the long-awaited "Retirement Security Rule: Definition of an Investment Advice Fiduciary" last week. President Joe Biden held an accompanying press conference and emphasized the need to eliminate "junk fees."

"Some advisers and brokers steer their clients toward certain investments not because it's the best interest of the client, because it means the best payout for the broker," Biden said. "I get it, understand it. But I just want you to know we're watching."

'Out of touch'

According to the DOL, the rule package would update the regulatory definition of investment advice fiduciary to better reflect the purpose of ERISA and to close loopholes that the currently effective definition may have unintentionally created.

The rule surprised industry participants with its comprehensive determination to extend fiduciary duty in defiance of a 2018 Fifth Circuit Court of Appeals decision throwing out a previous fiduciary rule.

"The proposal is out of touch with the anxieties of regular people who are worried about savings lasting through retirement, the effect of volatile markets on 401ks, and the high cost of living," said Jillian Froment, executive vice president and general counsel for the American Council of Life Insurers. “Traditional pensions are no longer the norm, and guaranteed lifetime income through annuities lets people create their own pensions. That’s why annuity ownership is up.

“Cutting off retirement options ignores the realities of the savings gap and builds a barrier to financial inclusion.”

The other three rule pieces open for comment are titled, "Proposed Amendment to Prohibited Transaction Exemptions 75-1, 77-4, 80-83, 83-1, and 86-128," "Proposed Amendment to Prohibited Transaction Exemption 84-24" and "Proposed Amendment to Prohibited Transaction Exemption 2020-02."

To comment on the fiduciary proposal

Comments can be made electronically at regulations.gov, or via mail at: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N–5655, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC 20210, Attention: Definition of Fiduciary—RIN 1210–AC02.

During the summer of 2015, the Obama-era fiduciary rule attracted more than 3,000 comments during a public comment period that was extended by the Labor Department. The Obama DOL published that rule eight months later and lawsuits followed before the industry ultimately won in court in 2018.

InsuranceNewsNet Senior Editor John Hilton 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.

© Entire contents copyright 2023 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.