House GOP tells Acosta to delay — then repeal — DOL fiduciary

More than 100 House Republicans wrote a letter to the new DOL secretary, telling him there is an 'urgent need' to act on the investment-advice regulation

May 2, 2017 @ 5:06 pm

By Mark Schoeff Jr.

A large contingent of House Republicans on Tuesday increased the pressure on Department of Labor Secretary Alexander Acosta to extend the delay of the agency's fiduciary rule and eventually kill it.

In his first week on the job, Mr. Acosta is being bombarded by Republicans and financial industry opponents of the regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts.

The DOL delayed implementation of the rule from April 10 to June 9 as it begins a reassessment of the regulation directed by President Donald J. Trump in a Feb. 3 memo. That review could lead to modification or repeal of the regulation if it is found to deny access to advice for small investors or increase litigation risk for financial firms.

But two provisions, one that would expand the definition of who is a fiduciary to retirement accounts and another that establishes impartial conduct standards, are slated to go into effect on June 9.

A group of 124 House Republicans told Mr. Acosta in a letter to halt even those provisions during the review.

"We are writing to strongly encourage the department to delay — in its entirety — the Department of Labor's final rule," wrote Rep. Phil Roe, R-Tenn., and dozens of his GOP colleagues. "While we understand you are faced with many critical issues, there is an urgent need for your attention to this rule."

They went on to write: "While we appreciate that the department has delayed enforcement of its rule for 60 days, we urge you to act expeditiously to reverse this significantly flawed rule."

Their words echoed those of financial industry trade associations, who called on Mr. Acosta to make an extension of the delay his first order of business. The former dean of the Florida International University law school was sworn into office last Friday.

Critics of the rule say that it is too complex and costly and would deny investment advice to workers and retirees with modest assets.

The House Republicans used an example of an investor with $2,000 in a retirement account. A 1% or 2% fee, they said, would amount to $20 or $40.

"The most likely outcome for that investor is that they will either invest their funds with no advice or wait to invest until they have sufficient funds to receive advice," the lawmakers wrote. "Neither of these outcomes is desirable from a public policy perspective."

Democrats and fiduciary advocates counter that the rule is required to protect workers and retirees from conflicted advice that leads to sales of inappropriate high-fee investments that erode savings.

They claimed a victory over the weekend when a provision to kill the DOL fiduciary rule was kept out of a bill to fund government operations through September.

Supporters of the rule assert that the DOL review of the regulation, which was finalized last year by the Obama administration, is politically motivated and that the agency has already made up its mind to overhaul or repeal the regulation.

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