Removing Barriers Blog

CUNA Weighs in on the U.S. Department of Labor’s Proposed Fiduciary Rule
Posted July 21, 2015 by CUNA Advocacy

CUNA submitted a comment this week to the U.S. Department of Labor (DOL) concerning the proposed regulation defining who is a “fiduciary” of an employee benefit plan under the Employee Retirement Income Security Act of 1974 (ERISA) which includes adding brokers and advisers providing advice to individual retirement accounts to the definition. This proposal has attracted a lot of scrutiny from a number of industries, as well as other regulators, because of its overly broad consideration of what is investment advice, its unclear proposed exemptions, and the its potential negative impact on consumers seeking retirement and savings planning information.

In our comment letter, CUNA stated that we support the goal of this rule to protect investors and encourage all advisors to act in the investor’s best interest. And, noted that Credit unions exist to serve their members, and inherent in the credit union movement is acting in a member’s best interest.

We also highlighted the fact that credit unions offering investment services to their members aim to help American families of all means receive information about saving for retirement and planning for their future. The letter pointed out that while many large investment firms seek high net-worth clients, credit unions seek to provide services to their members in all financial situations and make it easier for these individuals to map out financial plans.

CUNA’s comments further stated that we agree with the DOL that credit union members, and all consumers, deserve the best possible service when seeking information about retirement plans or Individual Retirement Account (IRA) distributions. However, it is important to have rules that encourage and promote retirement savings – rather than potentially chill the ability of credit unions, or other financial institutions, to provide these products and services.

The comment expressed that it is necessary for the DOL to analyze how it can more narrowly tailor the definition of “investment advice” to assure that credit union employees, who are only tangentially involved in providing investment services, are not included in the rule. Furthermore, CUNA urged the DOL to further consider how the barriers created by creating strict rules in this area could negatively impact consumers’ access to retirement and other investment services, particularly for lower net-worth credit union members who may have fewer opportunities to participate in retirement and savings plans.

Additionally, CUNA’s letter expressed concerns about regulatory overlap noting that federally chartered credits unions are supervised by the National Credit Union Administration, and also the Consumer Financial Protection Bureau if they have $10 billion or more in assets, and state-charted credit unions are regulated at the state level. Furthermore, the Financial Industry Regulatory Authority and U.S. Securities and Exchange Commission already require specific licenses and compliance with certain laws for registered brokers, insurance agents, and investment advisors in credit unions. Any additional oversight in this area is unnecessarily duplicative and could be burdensome to credit unions who are already facing a multitude of regulatory hurdles.

In closing the comment urged the DOL to reconsider its overly broad consideration of what is investment advice to assure that ultimately consumers and credit union members are not negatively impacted, and that they can continue to receive information about their options for retirement and savings.

The DOL plans to hold a public hearing concerning this proposed rule on August 10, 11, and 12, and continuing through August 13. Requests to testify at this hearing must be received by 5:00 p.m. EDT, July 24, 2015. CUNA will continue to follow the DOL’s work in this area.


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