Learn more about Member Benefits
This week the Department of Labor (DOL) held a public
hearing for four consecutive days concerning its proposed
regulation defining who is a “fiduciary” of an employee benefit plan under
Employee Retirement Income Security Act of 1974 which includes adding brokers
and advisers providing advice to individual retirement accounts to the
definition. CUNA has previously
expressed concerns that this rule could impact the ability of credit unions
to offer retirement products and services to members.
During the hearings both sides of the debate were
represented, with panels of impacted industries and interest groups testifying,
and DOL officials questioning the panels. Throughout the hearing DOL officials
appeared to remain intent on moving forward with the rule. But, the different
panelists who were critical of the rule put forward a multitude of concerns
with it, arguing among other things, that the rule would give investors less
choice and increase their costs. There were also extensive discussions about
the utility of the best interest contract exemption, and deep criticisms of it.
Additionally, many panelists suggested that the DOL needs to simplify how it
treats compensation in its rule.
A number of panelists also urged the DOL that it would be
more practical to better enforce existing laws under the Securities and
Exchange Commission and the Financial Industry Regulatory Authority, rather
than create new requirements under a new regulator. In the alternative, some
advocacy groups testified in support of the rule and argued that it would
provide needed reforms.
A number of the panelists expressed similar concerns as those
outlined in CUNA’s comment letter on this issue. Specifically, they expressed
concerns that the rule will detrimentally impact lower income investors. In our
comment, CUNA urged the DOL to consider how the barriers created by 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.
CUNA’s comment also made the distinction 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, while
many large investment firms seek high net-worth clients.
The hearing transcript will be made available by the DOL,
and the public will have 10 days to comment in response to it after it becomes
publically available. CUNA plans to review the transcript, and will likely file
The Senate held
a hearing about this proposed rule in July and Members of Congress in both
the House and Senate have sent letters to the DOL about the rule. This week Labor
Secretary Thomas Perez responded to a letter from House Republicans criticizing
the rule by defending it and expressing that the agency intends to finalize it.
CUNA is continuing to follow all of the events surrounding
the proposed rule, and will be providing the DOL with additional feedback.
Please contact Leah Dempsey with any questions.
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Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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