Removing Barriers Blog

DOL Fiduciary Rule to Go into Effect in June
Posted May 23,2017 by CUNA Advocacy

The Department of Labor (DOL) Secretary Alexander Acosta published an Opinion piece in the Wall Street Journal this week stating that there is no legal precedent to change the June 9 applicability date for the Fiduciary Rule. He wrote, “We have carefully considered the record in this case, and the requirements of the Administrative Procedure Act, and have found no principled legal basis to change the June 9 date while we seek public input. Respect for the rule of law leads us to the conclusion that this date cannot be postponed.” 

However, the DOL on Monday night released guidance noting that during the phased implementation ending on Jan. 1, 2018, it will not be enforcing claims against fiduciaries working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions. 

The guidance further notes that the DOL has repeatedly said that its general approach to implementation will be marked by an emphasis on assisting (rather than citing violations and imposing penalties on) plans, plan fiduciaries, financial institutions, and others who are working diligently and in good faith to understand and come into compliance with the fiduciary duty rule and exemptions. Consistent with that approach, the DOL has determined that temporary enforcement relief is appropriate and in the interest of plans, plan fiduciaries, plan participants and beneficiaries, IRAs, and IRA owners. 

CUNA urged the DOL to provide more time for compliance with the rule in a letter sent in March. The letter highlights that because of the complexity of this rule and the uncertainty about compliance deadlines and applicability, a delay and additional analysis of the fiduciary rule would benefit credit union members. 

The Op-ed additionally highlights some of the Administration’s concerns with the Fiduciary rule. It notes that the Fiduciary Rule as written may not align with President Trump’s deregulatory goals. Further adding, “The rule’s critics say it would limit choice of investment advice, limit freedom of contract, and enforce these limits through new legal remedies that would likely be a boon to trial attorneys at the expense of investors. Certainly, it is important to ensure that savers and retirees receive prudent investment advice, but doing so in a way that limits choice and benefits lawyers is not what this administration envisions.”