On Thursday, March 2, 2017, the Employee Benefits Security Administration (“EBSA”) of the Department of Labor (“DOL”) published a notice in the Federal Register that took the first steps toward delaying the so-called “fiduciary rule.” The EBSA acted in response to President Trump’s Presidential Memorandum of February 3, 2017 that directed the DOL to evaluate the impact of the fiduciary rule on retirement investors’ access to retirement information and financial advice. See our blog article of February 10.
In late February, rumors surfaced in the employee benefits and financial press that the DOL would delay the application of the fiduciary rule for six months, but the EBSA did not go that far in the action announced Thursday. Instead, the EBSA proposed a 60-day delay of the effective date of the rule, and it asked for comments on whether a 60-day delay is sufficient. Comments on this aspect of the notice are due by March 17, 2017. The EBSA also asked for comments on substantive aspects of the rule and its implementing guidance. Those comments are due by April 17, 2017.
The tone of the introductory materials in the notice indicates that delaying the effective date of the fiduciary rule as finalized and becoming effective April 10, 2017 would have a greater adverse effect than if it was left to become law on April 10, 2017. However, the DOL is concerned that allowing the law to be effective and then implementing a regulatory change later would be disruptive for retirement plan and IRA markets and investors. The proposed delay of 60 days may give the DOL time to complete its analysis required by the February 3 Presidential Memorandum, the agency said. The 60-day delay period would end June 8, 2017, and the final fiduciary regulation, if nothing is done, would implement June 9, 2017.
So what will happen? The delay will almost certainly be adopted. It will provide greater time for the DOL to perform the legal and economic analysis the Presidential Memorandum requires, but it is not clear that 60 days will be sufficient. When the analysis is complete, the regulatory process will begin to repeal or modify the rule. It is also possible that the DOL will decide to let the fiduciary rule become effective June 9 or at some later date. The additional time period will provide both the supporters and the detractors of the fiduciary rule a greater opportunity to be heard.