The Labor Department’s final rule redefining who counts as a fiduciary under the Employee Retirement Income Security Act and Internal Revenue Code was released today and includes a number of revisions from its initial proposal, several of which were advocated by the American Bankers Association.
Notably, the final rule expressly prevents DOL from exercising regulatory authority to examine the books and records of a national bank or federal savings association, which ABA had argued would violate the National Bank Act and OCC regulations. ABA was the only commenter to raise concern over the rule’s visitorial powers provision to both DoL and the Office of Management and Budget. The rule also seeks to accommodate and preserve bank networking arrangements under the Gramm-Leach-Bliley Act and Regulation R, another change made in response to ABA concerns.
“We recognize the efforts that the DoL has made to address our concerns that the rule could make it harder for customers to continue to use these important bank services,” ABA President and CEO Rob Nichols said. “We are hopeful that the revised language of the rule preserves banks’ relationships with our customers.”
Nichols also noted ABA “will carefully review the final rule against bank practices and our customers’ needs, and will continue to do everything we can to provide the financial services our customers seek.”
ABA strongly urged DoL to withdraw and rework the rule following its initial proposal in April 2015, arguing that it would hinder banks’ ability to offer 401(k)s, IRAs and retirement financial planning to their customers and thus limit the choices available to everyday retirement savers.
ABA staff are working to review and assess the more-than-1,000-page rule to determine the rule’s impact on the banking industry. Banks have until April 2017 to comply with the best interest contract provision of the rule and until Jan. 1, 2018, to comply with the entire rule.