NAPA says DOL secretary Alexander Acosta wants to freeze fiduciary rule

In a conversation with Sen. Tim Scott, Mr. Acosta reportedly said he's been in communication with the White House and "recognizes the urgency of the situation"

May 11, 2017 @ 2:02 pm

By Mark Schoeff Jr.

Alexander Acosta
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Alexander Acosta

A financial industry critic of the Labor Department's fiduciary rule is claiming the new Labor Secretary Alexander Acosta has made stopping the measure his top priority.

In a May 10 blog post, the National Association of Plan Advisors said that Mr. Acosta discussed his stance during a recent meeting with Sen. Tim Scott, R-S.C.

"Labor Secretary Alexander Acosta says the Department of Labor's fiduciary rule is his No. 1 priority, and that he is actively seeking a way to freeze the rule that will 'stick,'" the NAPA blog states. "Acosta also said he is in constant communication with the White House and recognized the urgency of the situation."

The NAPA based its report on "a communication from [Mr.] Scott's office."

Michele Exner, Mr. Scott's press secretary, said that Mr. Scott and Mr. Acosta spoke over the phone recently. She did not characterize the conversation and said that she did not sit in on it. The senator's office did not release information about the discussion or what Mr. Acosta said.

"We didn't send anything out," Ms. Exner said. "I don't know where they would have gotten those notes."

A Labor Department spokeswoman said that she would look into the exchange between Mr. Acosta and Mr. Scott but did not follow up with a comment.

NAPA declined to comment on the blog post. Although NAPA has been critical of parts of the rule, the organization, an affiliate of the American Retirement Association, said it has been working with its members to implement the regulation and supports a fiduciary standard for retirement advice.

Immediately after Mr. Acosta was confirmed by the Senate on April 27, opponents of the DOL rule urged him to extend the implementation delay beyond June 9. The agency pushed back implementation of the rule to that date from April 10 while it conducts a reassessment at the behest of President Donald J. Trump. That reveiew could lead to modification or repeal of the rule.

Two key parts of the rule would become applicable on June 9, an expanded definition of who is a fiduciary to retirement accounts and impartial conduct standards they must follow. Opponents want the entire rule delayed during the review, which will last until the end of the year. Final implementation of the rule is scheduled for Jan. 1.

A group called Americans to Protect Retirement Security has launched a print and digital ad campaign telling DOL to "act now" to further delay the rule.

Mr. Acosta must make a decision soon on whether to push back the June 9 implementation date in order to leave time for a rulemaking process.

An industry lobbyist said on Thursday that Mr. Acosta could extend the delay without a notice and comment period while adhering to regulatory requirements. But he may be holding off out of fear of being sued by supporters of the rule.

Meanwhile, Capitol Hill Republicans are pushing Mr. Acosta to act.

"[W]e respectfully request that you carry out the president's directives without delay and finalize a new fiduciary rule review before any part of the rule becomes applicable," Mr. Scott and eight of his GOP colleagues wrote in an April 28 letter to Mr. Acosta.

The rule would require financial advisers to act in the best interests of their clients in retirement accounts. Opponents say it is too complex and costly. Supporters argue that the rule is required to protect workers and retirees from conflicted advice that results in the sales of inappropriate high-fee investments that erode savings.

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