The Labor Department has extended by 15 days the comment period for a controversial proposal that would raise investment advice standards for brokers working with retirement accounts, acquiescing to demands from members from both parties in Congress for more time to respond.
In a letter sent Friday to several Democratic senators, Labor Secretary Thomas Perez said the initial comment period would last for 90 days instead of the original 75. The deadline had been set at July 6.
Mr. Perez said the total comment period may be more than 140 days. After the first round of comments, the department will hold a public hearing during the week of Aug. 10. Following that event, the comment period will reopen for an additional 30 to 45 more days.
“This is considerably longer than the typical comment period for [the Employee Benefits Security Administration's] other proposed rule makings,” Mr. Perez wrote in a letter to Sen. Jon Tester, D-Mont. “We believe this accommodation will provide adequate time for the public to provide their input on this issue and for the administration to continue its dialogue with the stakeholder community.”
Mr. Tester and eight other Senate Democrats wrote to Mr. Perez last week asking for a 45-day extension, or a total of 120 days in the initial comment period. House Democrats penned a similar letter. Leading Senate Republicans followed suit this week with the same request.
The lawmakers said that the rule, which would require brokers to act in the best interests of their clients in 401(k) and individual retirement accounts, is too complex for comments to be filed in 75 days.
Wall Street was not satisfied with the additional 15 days.
“While we appreciate the extra two weeks, federal regulators should further extend the comment period,” Francis Creighton, executive vice president for government relations at the Financial Services Roundtable, said in a statement.
It remains uncertain whether the Obama administration can finalize the rule. The longer the comment period goes, the greater the chances it will fail, said an advocate for the measure.
“It's pretty clear [the industry] is trying to delay it to kill it,” said Micah Hauptman, financial services counsel at the Consumer Federation of America.
The Obama administration says the rule will protect workers and retirees from conflicted advice that generates high fees and eats away at their retirement nest eggs. The financial industry has argued that the proposal would significantly increase brokers' regulatory and liability costs and price middle-income investors out of the advice market.