The Labor Department has sent a final rule for an 18-month delay of its fiduciary regulation to the Office of Management and Budget for review.
The OMB posted on its website Thursday morning a notice that it had received the delay language from DOL. If the OMB approves the delay measure, which is likely, it will be returned to DOL. The DOL will then release it publicly. It's unclear how long the process will take.
The DOL fiduciary rule, which requires brokers to act in the best interests of their clients in retirement accounts, was partially implemented in June. Under the delay proposal, implementation of the enforcement mechanisms of the rule would be delayed from Jan. 1, 2018, to July 1, 2019, while DOL re-assesses the impact of the rule under a directive from President Donald J. Trump. That review could lead to substantial changes in the remaining parts of the rule.
While the DOL reviews the rule, the Securities and Exchange Commission is working on its own fiduciary rule proposal that would apply to retail investment accounts. The two agencies are cooperating in setting investment-advice standards.
Industry opponents of the DOL rule say it is too complex and costly and would sharply increase the price of advice, forcing brokers to abandon clients with small retirement accounts. Backers of the rule assert that it has the teeth to mitigate broker conflicts of interest that result in the sale of inappropriate high-fee investment products that erode savings.