The Department of Labor is facing criticism from industry groups over its proposal to redefine the definition of fiduciaries in retirement plans and extend exemptions to prohibited transactions, according to news reports.

In March, the agency proposed defining the term “independent fiduciary” more broadly, turning the process of obtaining exemptions to a case-by-case basis and requiring fiduciaries to disclose if they’re under state or federal investigation, FA-IQ sister publication Ignites writes.

The DOL claimed that the proposal is merely an update and clarification of existing rules, according to the publication.

But the Securities Industry and Financial Markets Association, the Investment Company Institute, U.S. Chamber of Commerce, American Institute of Certified Public Accountants and Erisa Industry Committee have taken issue with aspects of the rule, Ignites writes.

Sifma claims that the proposed changes are in fact “far more extensive than perhaps the department understood when it proposed these changes,” raising “both novel legal and policy issues and [would] have long-term economic effects on plans, participants and retirement security,” Sifma told the agency in a comment letter, according to the publication.

Moreover, Sifma claims that the proposal in its current form, if adopted, would go beyond DOL’s regulatory authority, suggesting possible legal challenges, according to Ignites.

In its comment letter, Sifma said that the Fifth Circuit Court of Appeals’ 2018 ruling vacating the DOL’s fiduciary rule concluded that the agency exceeded its authority by imposing the same impartial conduct standards on individual retirement accounts, according to the publication.

Sifma and the U.S. Chamber of Commerce were instrumental in overturning the Obama-era rule, having filed a court challenge against it in 2016, as reported.

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