Advocacy group demands update on rule revamping; 'withdraw and re-propose, not withdraw and walk away'
The Financial Services Institute Inc. and the Financial Services Roundtable have upped the volume in their latest exchange with the Labor Department over its plans to expand the fiduciary universe.
This time, the advocacy groups are demanding a progress report from the federal agency to find out where the DOL is on its efforts to re-propose a controversial piece of regulation that would make more of those who take part in retirement income transactions fiduciaries under the Employee Retirement Income Security Act of 1974.
At the center of the imbroglio: The rules would apply not only to retirement plans, but also individual retirement accounts. That, in turn, would upset the commission-based business model for broker-dealers.
Both FSI and the Roundtable also are calling upon the DOL to show if it's following a series of criteria outlined last year by members of Congress from both parties.
Legislators suggested that any re-proposed rule recognize that IRAs are substantially different from employer-sponsored plans because the IRA investor has a nearly limitless choice among service providers and investment products.
Legislators also said the rule should avoid new regulatory requirements that would cost more than they benefited investors and that it must be narrowly drafted to address well-defined and documented concerns.
“All along, FSI has called for DOL to ‘withdraw and re-propose,' not 'withdraw and walk away,'” said Dale Brown, FSI's president. “Letters from a long, bipartisan roster of members of Congress reinforce the same desire to get these rule changes right. Yet we still have no idea what the problem is, while we're told they are working on a solution.”
“The problem we are addressing in the re-proposal has been clear since this process began — to help retirement plans and IRA owners get good, reliable investment advice that puts their interests first,” said DOL spokesman Michael Trupo. “Our re-proposal, when complete, will provide ample opportunity for public comment, both on the proposed rule itself and on our assessment of its likely effects. We are making good progress as we make every effort to get this right.”
The FSI/Roundtable request follows a series of bitter exchanges between the financial services industry and the DOL. In the last few weeks, the groups have been feuding with the regulatory agency over the DOL's request for reams of data on the IRA marketplace, including information on performance and fees.
Most recently, the financial industry groups said in late February they are unable to give the Labor Department the information the agency seeks, arguing that the data requested was too detailed and that there was insufficient time to pull the info together.
