Removing Barriers Blog

House Passes Resolution to Block DOL Fiduciary Rule
Posted April 29, 2016 by Chandler Schuette

This week the House passed H. J. Res. 88, a resolution that would block the DOL’s recently released Fiduciary final rule using the Congressional Review Act. The resolution was introduced by Representatives Phil Roe (R-Tenn), Charles Boustany (R-La.) and Ann Wagner (R-Mo.) earlier this month. The House voted 234-183 along party lines to overturn the rule.  A similar measure was introduced in the Senate by Senators Johnny Isakson (R-GA) Lamar Alexander (R-TN), and Mike Enzi (R-WY).  

Nevertheless, the prospects of this being a successful gambit are slim.  The Congressional Review Act procedure requires the signature of the president (or Congress to override a presidential veto).  The administration has been very supportive of the rule, making a veto of a CRA resolution likely; the vote in the House was a party-line vote, making an override of the veto unlikely.   

CUNA has had an interest in this rule because of the potential impact on credit unions as a result of the administration expanding the definition of a “fiduciary” to cover persons who receive compensation for providing advice based on the particular needs of the person being advised or if he or she directs that person to a specific plan sponsor, plan participant, or individual retirement account (IRA) owner.  During the rulemaking process, we raised concerns in letters to the Department of Labor and to Congress about the overly broad definition of what is considered investment advice, and took issue with the proposed “education carve out” for the rule which we did not believe went far enough.  

The final rule included some clarifications about what is considered education and advice, which are outlined in full in CUNA’s Removing Barriers Blog. The final rule also contains some CUNA-requested clarifications on the Best Interest Contract Exception (BICE), which is only applicable to financial institutions that acknowledge fiduciary status, which would at the very least include credit union service organizations (CUSOs).  

We remain aware that parts of this rule will add compliance burdens to CUSOs, and potentially credit unions offering certain product and services, so we will continue to follow these resolutions.