The Department of Labor is realistically likely to deliver a new fiduciary rule in the spring, a pair of industry analysts said last week.
Officially, the Employee Benefits Security Administration plans to issue the new fiduciary rule by next month, according to DOL's regulatory agenda. But nobody expects that to happen, said Bradford P. Campbell, partner at Faegre Drinker Biddle & Reath.
"I think probably it's more like the spring," Campbell said. "That's because the issues are hard. To their credit, they're spending a lot of time meeting with people and discussing the issues. I think DOL is just taking time to do the rule as best they can."
Campbell was joined Thursday by Fred Reish, partner at Faegre Drinker Biddle & Reath, on a webinar update of regulatory and political issues of note. The list was dominated by what is happening inside the DOL and its latest attempt to establish a true fiduciary rule.
Campbell, who headed the Employee Benefits Security Administration until President George W. Bush, said Lisa Gomez did well during her recent confirmation hearing before the Senate. President Joe Biden's pick to lead EBSA, Gomez is likely headed for confirmation, but that timeline isn't a factor in ongoing work on a new fiduciary rule, he added.
"I've heard from people that I that they're actually working very hard on it right now," Reish said. "So it's not like it's been set aside on the top of a desk until somebody gets confirmed."
The DOL produces regulatory agendas in the spring and fall. When the fall 2021 agenda is made public, likely within a couple weeks, it will provide further clarity on the status of work on a new fiduciary rule, Campbell explained.
In February, the Department of Labor allowed the investment advice rule, written by the Trump administration, to take effect. That rule replaced the 2015 fiduciary rule produced by the Obama administration. A federal appeals court later vacated the fiduciary rule.
PTE 2020-02 applies to recommendations for rollovers and other movement of retirement money. Broker-dealer representatives and investment advisors can use the exemption to collect compensation for transactions involving 401(k)s or IRAs. Insurance producers can still use PTE 84-24 for annuity and life insurance sales involving retirement funds.
"I think 84-24 will definitely be modified," Reish said. "There will be provisions of 2020-02 that'll be moved over to it. Probably the fiduciary acknowledgement, the best interest standard and maybe specific disclosures of reasonable compensation limitation. It'll look a lot more like a fiduciary type rule than it does right now."
The thing to watch is how the DOL ends up treating fixed indexed annuities, he added. Regulators have tried for years to apply tougher regulations to these products.
"Fixed indexed annuities would be the one type of annuity most impacted by [rewriting 84-24]," Reish said.
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.