A flood of impassioned responses to the Labor Department's proposed rule to expand the definition of fiduciary has prompted the agency to give the public 15 more days to submit comments.
The DOL yesterday said it would leave the public hearing record open for 15 days past the release date of the official transcript of its March 1-2 hearing. There is no date set for the transcript to go up on the website, said DOL spokeswoman Gloria Della.
The Labor Department's move to expand the definition of fiduciary would do away with the five-part test being used now and instead designate as a fiduciary anyone who renders advice to a retirement plan or participant for a fee or who provides advice or recommendations on the management of securities.
So far, the proposed regulation has attracted nearly 200 comments, followed by 39 requests to testify at the DOL's public hearing on March 1-2. There, members of the retirement plan industry gnashed their teeth: Record keepers were concerned that they inadvertently would be considered fiduciaries for providing plan sponsor clients with an array of funds.
Meanwhile, broker-dealers expressed ire about the rule, saying it would give them two varieties of “fiduciary” to track — the one being mulled by the Securities and Exchange Commission's staff and the one promulgated by the Labor Department.
The application of the rule to individual retirement accounts raised the temperature of all industry participants, with broker-dealer firms claiming they would have to shift their commission-based IRAs to a fee-based advisory model. Firms have said that this would raise compliance costs on their end, too.
Under the new regulation, record keepers would have a harder time capturing IRA rollover business as participants exit the plans with which they work.
Interested parties can continue to send in comments via e-mail at
[email protected] with the subject heading “Public Hearing on Definition of Fiduciary” or via mail to the Employee Benefits Security Administration's Office of Regulations and Interpretations, Attn: Public Hearing on Definition of Fiduciary, Room N-5655, Department of Labor, 200 Constitution Ave. NW, Washington, D.C. 20210.
