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Acosta: DOL Will Enforce Fiduciary Rule Despite Delay

November 17, 2017

The Department of Labor will go after violations of its fiduciary rule despite the 18-month delay of its final implementation date, Labor Secretary Alexander Acosta told lawmakers this week, according to ThinkAdvisor. But the DOL cannot yet resort to enforcing recommendations made in individual retirement accounts, a legal expert tells the publication.

Speaking in front of the House Education and Workforce Committee, Acosta said the DOL will use its enforcement authority in cases of “willful violations” of the rule, which purports to require retirement account advisors to put clients’ interests first and went into partial effect in June, the publication writes.

Acosta clarified that the Labor Department is at the “compliance assistance” stage of the rule’s rollout, the publication writes. The rule’s final compliance deadline has been pushed back to July 2019.

Fred Reish, partner in the employee benefits and executive compensation practice group of Drinker Biddle & Reath, tells ThinkAdvisor the DOL only has enforcement authority in cases involving recommendations to retirement plans and their participants and not to IRAs. Furthermore, because it’s in compliance assistance mode, the DOL will treat even recommendations to plans and participants differently, Reish tells the publication.

Alexander Acosta (Getty)

If the Labor Department deems that a firm has been making good-faith efforts to comply, it will overlook minor infractions, but it will resort to enforcement with firms that haven’t taken diligent steps to comply, he tells ThinkAdvisor. That, however, leaves a grey area filled with firms that have taken some measures to comply but haven’t gone far enough, Reish tells the publication.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.