DOL issues bulletin to ease confusion over near-term fiduciary rule compliance

The Department of Labor intends to grant relief to firms for compliance violations that may occur as the April implementation date approaches

Mar 10, 2017 @ 6:46 pm

By Greg Iacurci

+ Zoom

The Department of Labor on Friday issued an enforcement memorandum intended to ease compliance concerns related to its fiduciary rule in the near term, as the agency reviews the rule and decides whether or not to delay it.

John J. Canary, the DOL's director of regulations and interpretations, issued a field assistance bulletin to Mabel Capolongo, the director of enforcement of regional directors, on Friday to lay out its temporary enforcement policy on the fiduciary rule.

The bulletin comes in the wake of a proposed rule to delay the fiduciary rule, which raises investment advice standards in retirement accounts, by 60 days. The first phase of the rule's implementation is set to begin April 10.

"Although the department believes it will issue a decision on the March 2 proposal before the April 10 applicability date … the department has determined that temporary enforcement relief is appropriate to protect against investor confusion and related marketplace disruptions attributable to uncertainty regarding the timing of the department's decision on whether to delay the applicability date of the fiduciary duty rule and related [prohibited transaction exemptions]," the memo said.

There are two prongs to the agency's temporary relief.

In the first, if the DOL ultimately does delay the fiduciary rule, but a final delay isn't issued until after the rule's April 10 implementation date, the DOL won't enforce violations by financial institutions that occurred during that "gap" period.

The second concerns a scenario in which the DOL doesn't delay the rule. In this case, the DOL won't bring an enforcement action because an adviser or institution failed to satisfy the conditions of the fiduciary rule, "provided that the adviser or financial institution satisfies the applicable conditions of the rule … within a reasonable period after the publication of a decision not to delay the April 10 applicability date."

"It seems to be written pretty broadly," Micah Hauptman, financial services counsel at the Consumer Federation of America, said of the reference to a "reasonable period."

"The DOL said regardless of what decision we make, whether we decide to delay or don't decide to delay, we won't enforce violations, we won't bring enforcement against firms for violations in the near term," Mr. Hauptman said.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

How to effectively engage and serve female clients

It is clear building relationships with women is a proven way to grow your business. Heather Ettinger of Fairport Asset Management explains proven segmentation strategies.

Latest news & opinion

DOL fiduciary rule causing DC-plan record keepers to change business with insurance agents

Principal has communicated that independent agents must change their business models to keep receiving compensation.

DOL fiduciary rule opponents want to push implementation back until 2019

ICI, Chamber of Commerce among groups asking for delay, while Democratic lawmakers call on DOL to keep to its earlier planned schedule of Jan. 1, 2018.

Take 5: Vanguard's new CIO Greg Davis talks bonds, stocks and costs

Having just stepped into the role, this veteran of the firm now oversees $3.8 trillion in assets in more than 300 mutual funds and exchange-traded funds.

Tech companies deploy behavioral finance tools for advisers

They seek to turn knowing more about clients into growing more revenue.

Retirement planning for women

Longer lifespans and lower savings require creative income strategies.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print