More than a dozen financial industry groups have asked the Department of Labor to extend the comment period for a proposal that would raise investment-advice standards for retirement accounts.
Last week, the agency
released the rule, which is designed to limit conflicts of interest for retirement advice by requiring brokers to act in the best interest of clients when working with 401(k), individual retirement accounts and other retirement vehicles.
The lengthy regulation was
published on April 20 in the Federal Register and the deadline for submitting comments is July 6, or 75 days from the date it was published.
"The industry knows their best chance of killing this rule is to delay it until the clock runs out," said Barbara Roper, director of investor protection at the Consumer Federation of America.
The industry groups said they need an extra 45 days to respond to the proposal's provisions, which include a broad exemption allowing brokers flexibility in compensation arrangements as long as they sign a contract agreeing to act as fiduciaries for their clients.
“The proposal contains detailed new rules, a new exemption that will subject IRA advisers to increased legal risk for violations of strict prudence requirements, and a host of detailed changes to existing and widely-used exemptions,” wrote Richard Foster, senior vice president of the Financial Services Roundtable, on behalf of the 16 organizations in
an April 21 letter to the DOL. “The industry will require time to assess its ability to comply with the conditions of the exemptions.”
Organizations signing the letter include the Securities Industry and Financial Markets Association, the Financial Services Institute, the Insured Retirement Institute, the National Association of Insurance and Financial Advisors and the Investment Company Institute.
PUBLIC HEARING
After the comment period concludes, the DOL will hold a public hearing within 30 days. It will publish the transcript from that hearing and then take more comments on the proposal.
"That's not just sufficient to allow for a careful and thorough review, it is quite generous," Ms. Roper said.
Several consumer advocate groups who are proponents of the DOL rule delivered to Congress on April 22
petitions supporting the regulation signed by 225,000 people.
“The petitions urge Congress, regulators and the White House to stand firm against an intensified Wall Street campaign to block, delay or water down this important effort to protect our retirement security,” Americans for Financial Reform, which sponsored one of the petitions, said in a statement.
The rule has received strong backing from President Barack Obama, who said it is part of his “middle-class economics” initiative and will protect retirement savings from high fees and poor investment performance related to conflicted financial advice.
In the economic analysis included in the rule proposal, the DOL estimates that its provisions would give IRA investors gains of between $40 and $44 billion over 10 years while placing $2.4 billion to $5.7 billion in compliance costs on the industry over the same period.
Financial firms forced the DOL to withdraw its original proposal, which was released in 2010, saying it would significantly increase regulatory and liability costs for brokers and force them to abandon retirement savers with modest assets.
