OMB OKs DOL Fiduciary Rule Delay With ‘Change’

The Office of Management and Budget swiftly completed its review Monday of a Department of Labor request for a 90-day delay of the controversial Obama-era fiduciary rule.

Exactly what the OMB is recommending is not known, an industry source said, but the office concluded the delay is "Consistent with Change." The change is not yet defined. OMB typically takes 60 to 90 days to review a rule change, but completed the DOL delay rule in less than three weeks.

The OMB action means the department can publish its delay rule in the Federal Register, which officially delays phase two of the fiduciary rule. The DOL seeks a delay from Jan. 1, 2018 until July 1, 2019.

Phase two of the rule deals with exemptions, which regulate the sale of annuities sold with retirement funds. In particular, the Best Interest Contract Exemption, which requires a financial institution to accept liability for each contract and gives clients the right to sue over investment advice.

Documents were filed with the OMB Aug. 9 to delay phase two.

Phase one of the DOL rule took effect June 9. It requires advisors and agents to act as fiduciaries, make no misleading statements and accept only “reasonable” compensation.

Still, opponents are far more concerned with phase two rules that establish a class-action right to sue and could make it difficult for independent agents to sell through IMOs. Without the latest delay, the BICE will be required to sell fixed indexed and variable annuities beginning Jan. 1, 2018.

In addition, the DOL said the delay will apply to two other exemptions, PTE 84-24 and PTE 2016-02. The latter exemption applies to advice to individual retirement accounts and employee benefit plans.

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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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.