Bill to Kill DOL Rule Moves to House Floor
One of the bills to repeal the Department of Labor’s fiduciary rule, which aims to force retirement account advisors to put clients’ interest first, now moves for a full House vote, BenefitsPro writes.
The House Committee on Workforce and Education voted along party lines Wednesday to approve the Affordable Retirement Advice for Savers Act, which would replace the fiduciary rule with a best interest standard based on disclosure, the web publication writes.
The bill, introduced by Rep. David Roe, R-Ten., aims to amend the Employee Retirement Income Security Act to introduce a new best-interest standard for financial advisors, according to BenefitsPro. In addition, the bill would revoke the best interest contract exemption that the DOL’s rule amended, the web publication writes. Under the DOL’s rule, the exemption lets retirement advisors sell some commission-based investment products after signing an agreement with clients.
While the bill uses language similar to the DOL’s rule in defining investment advice, it’s far more lenient on how advisors disclose their fiduciary status, according to BenefitsPro. Advisors would be allowed to tell clients that certain communications are not meant for any client individually and do not constitute investment advice, the publication writes. In that way, the bill would let advisors provide certain educational services, including options for rollovers of individual retirement accounts, without falling foul of the best interest requirement, according to BenefitsPro.
And while variable compensation on investment products would require the best interest contract exemption under the DOL’s rule, under Roe’s bill it would be allowed as long as brokers disclose the various levels of compensation in a range, the publication writes. And advice firms would have a 30-day window, if they fail to provide disclosure, to “correct the issue,” BenefitsPro writes.
Democrats on the committee took issue with the bill, saying it would let “unscrupulous” advisors take advantage of retirement savers, the publication writes. The House is expected to pass the bill, but it would need at least 60 votes to pass the Senate, according to BenefitsPro.
The DOL’s fiduciary rule, which went into only partial effect last month, still faces several many other challenges, as reported previously. The DOL itself has already put out a request for comment on the rule, asking whether its full implementation, currently scheduled for January, should be delayed. In addition, the House Appropriations Committee is going to vote on a DOL funding bill that would take away DOL’s enforcement powers in regard to the fiduciary rule. And a separate bill from Rep. Ann Wagner, R-Mo., aims to replace the fiduciary rule with a best interest standard applicable to all brokers offering retail investment advice. The rule also faces several challenges put forward by industry groups in the courts.
Based on the DOL’s language in its recent request for information, the rule will likely be delayed, a panel at the American College concluded yesterday, according to insurancenewsnet.com. Furthermore, a provision within the rule prohibiting advice firms from requiring clients to waive their right to class-action lawsuits may get removed, the panel said, according to the web publication. On the other hand, the panel also said the rule isn’t going away entirely, insurancenewsnet.com writes.