A House Republican lawmaker on Thursday called on President Donald Trump to delay the April implementation of a Labor Department investment-advice regulation.
In a letter to Mr. Trump, Rep. Pete Sessions, R-Texas and chairman of the House Rules Committee, characterized the regulation as “unnecessarily raising investment advice standards for retirement accounts” and said it would foist “mountains of paperwork” on financial planners while denying “access to quality investment advice” to millions of investors.
“I strongly urge you to immediately announce a delay of the applicability date of the rule,” Mr. Sessions wrote. “[I]t is critical that your administration announce a delay as soon as possible as impacted stakeholders are continuing to accrue significant costs in efforts to comply with the April 10, 2017 effective date and struggling to manage increasing client uncertainty and confusion.”
The rule requires financial advisers to act in the best interests of their clients in retirement accounts. The Obama administration asserted that the rule is crucial to protecting investors from conflicted advice that leads to the sales of inappropriate high-fee products that erode savings.
An advocate warned that it won't be easy for opponents to delay the rule because doing so requires a rulemaking process involving a comment period and an assessment of the consequences of slowing implementation.
“It's the law of the land,” said Kathleen McBride, chairman of the Committee for the Fiduciary Standard. “They would have to do a cost-benefit analysis including the impact on investors.”
In his letter, Mr. Sessions said the insurance industry would be significantly harmed by the rule. He noted a Jan. 18 proposal by the DOL to ease compliance for some fixed-income annuity providers.
“I urge you to postpone [the rule's] implementation and to work with all stakeholders, including the annuity industry and those who sell fixed indexed and variable products, to make certain that retirement savers have a broad choice in investments and that advisers act in their clients' best interest when making investment recommendations,” Mr. Sessions wrote.
In a brief this week in an industry lawsuit against the rule, the Department of Justice wrote that the DOL proposal for annuity producers “merely provides additional options for compliance. It does not render the existing options inadequate.”
Mr. Sessions wrote to Mr. Trump because the DOL rule “has been a big issue facing constituents in our district,” an aide to the lawmaker wrote in an email.
While Mr. Sessions appeals directly to the Trump administration, Rep. Joe Wilson earlier this year introduced legislation that would delay the rule for two years.
Supporters of the regulation will engage in the political battle, according to Ms. McBride.
“For Sessions of Texas, we'll go local, and for Trump, we'll go national,” she said.