DOL Wants to Delay Fiduciary Rule

The move comes as many firms have been plowing ahead with plans to comply with the regulation, originally set to take effect on April 10.

The Labor Department on Wednesday filed a proposal that would delay by 60 days the implementation of an Obama-era rule aimed at preventing conflicts of interest in the retirement adviser industry.

Over the following 45 days, it will accept comments on the fiduciary rule, including its best interest contract exemption.

The rule would require brokers and advisors to recommend investments that are in the best interests of clients, not merely suitable for them, when they give retirement account advice.

In its call for the delay, the Labor Depatment says it will provide a 15-day comment period for observers to weigh in.

Calling the rule costly and overly burdensome, trade groups for the securities and insurance industries filed lawsuits aiming to block to rule in three federal courts a year ago.

Last month Trump had asked the department to re-examine the rule and its effects on the financial industry.

"I think many commenters will urge the final delay regulation to be for a longer period of time, perhaps 12 months", Bradford Campbell, a partner at Drinker Biddle & Reath and a former DOL assistant secretary, wrote in an email.

Consumer groups who support the rule are anxious a delay could open the door for opponents to find ways to weaken or eliminate the rule.

Proponents of the rule, such as consumer advocacy groups, say the delay will jeopardize retirement savers' interests by allowing them to fall victim to high fees. "We are already seeing the negative consequences of the rule on the marketplace with some firms announcing that they will no longer offer certain products". Merrill Lynch, for example, recently indicated that it could walk back aspects of its implementation strategy, including a pledge to cease offering commission-based retirement accounts. Some firms have said they are going to move forward with the changes, which have been applauded by consumer advocates, regardless of what happens to the fiduciary rule.

"Absent an extension of the applicability date, if the examination prompts the Department to propose rescinding or revising the rule, affected advisers, retirement investors and other stakeholders might face two major changes in the regulatory environment rather than one", the Labor Department said in the proposal.

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