Labor Secretary Alexander Acosta today announced that the Department of Labor will not delay the June 9 effective date for the fiduciary rule, which greatly expanded the definition of who counts as a “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code. Acosta wrote in a Wall Street Journal op-ed posted this evening that he had reached the conclusion that the Administrative Procedures Act, which governs federal rulemaking, would not allow a further delay.
“We…have found no principled legal basis to change the June 9 date while we seek public input,” he wrote. “Respect for the rule of law leads us to the conclusion that this date cannot be postponed.” While the new definition takes effect June 9, additional conditions — such as specific disclosures and representations — are not required until Jan. 1, 2018.
DoL issued a bulletin on its “temporary enforcement policy” of phased implementation. “The department has repeatedly said that its general approach to implementation will be marked by an emphasis on assisting (rather than citing violations and imposing penalties on) plans, plan fiduciaries, financial institutions, and others who are working diligently and in good faith to understand and come into compliance with the fiduciary duty rule and exemptions,” DoL said. “Accordingly, during the phased implementation period ending on Jan. 1, 2018, the department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.”
Although Acosta declined to issue a further delay, he said that DoL will continue its review of the final rule pursuant to an executive action by President Trump. “The Labor Department has concluded that it is necessary to seek additional public input on the entire fiduciary rule, and we will do so,” he wrote. “Trust in Americans’ ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule.”
The American Bankers Association has strongly advocated for an additional delay and revisions to the rule to facilitate compliance and ensure it does not negatively affect the services available to bank customers. The association expressed disappointment that DoL decided to pursue implementation of a rule that it has said remains “fundamentally flawed and unworkable in critical areas.” For more information, contact ABA’s Tim Keehan.