18-month delay for key fiduciary rule provisions gets green light
The push to delay implementing key fiduciary rule provisions by 18 months is one step closer to reality.
The Office of Management and Budget concluded its review of the Department of Labor's proposal, a key phase in the administrative process.
Industry trade organizations had been lobbying the Trump administration to repeal what they see as the most onerous aspects of the fiduciary rule, particularly parts of the best interest contract exemption that permit clients to file class action lawsuits.
The Labor Department's proposal would push the implementation date for the BIC exemption as well as enforcement provisions to July 1, 2019 from January 1, 2018.
The rule has cost the firm tens of millions of dollars in compliance and lost revenue.
The length of the delay, however, was a surprise to some industry watchers and fiduciary advocates.
"I think it was widely expected that the DoL would extend the final implementation date past Jan. 1, but 18 months is a very long time to consider changes to a rule that has been in the works for six years," Duane Thompson, senior policy analyst at Fi360, told Financial Planning earlier this month.
In February, President Trump instructed the Labor Department to review the fiduciary rule with an eye to rescinding the regulation in whole or in part.
Secretary of Labor Alexander Acosta ultimately opted to let the first phase of implementation go forward in June, but is pursuing Trump's requested review.
The Labor Department not only indicated earlier this month that it would seek a lengthy delay of the rule's remaining provisions, but that it would also nix the enforcement provisions in the rule.
The department is embroiled in a lawsuit brought by Thrivent Financial for Lutherans, which is challenging the legality of the regulation's class action provision. Thrivent Financial argues that arbitration is better for its members.
Fiduciary advocates, however, contest that enabling clients to pursue class action lawsuits is a necessary tool to hold firms accountable.