The U.S. Department of Labor failed to seek advance input from affected parties—as required by official rulemaking procedures—before issuing proposed amendments to Prohibited Transaction Exemption 84-14, known as the Qualified Professional Asset Manager exemption, the American Bankers Association said Thursday during a public hearing on the proposal.
ABA pointed specifically to Executive Order 13563 and the Office of Management and Budget’s Circular A-4, both of which direct federal agencies to seek input from those likely to be affected by agency rulemaking. Rather than seeking the views of banks serving as qualified professional asset managers, the department released the proposal without any advance public reaction or input, and without conducting beforehand any study, survey, analysis or evaluation of the proposal’s possible impact on QPAMs, their client retirement plans, or the retirement marketplace, the association said.
ABA said that the Labor Department’s omission has led to a critical miscalculation of the proposal’s costs to retirement plans and to the retirement services industry, and that the misstep could have been avoided had the agency followed the directives of the executive order and circular. The association therefore recommended that the department withdraw the proposal and then reach out and consult with QPAMs and their client plans to determine whether significant revision of the QPAM exemption is necessary or appropriate. ABA and its member banks “stand ready to work with department staff to ensure that the QPAM exemption remains a standard-bearer for responsible investment management of the nation’s retirement assets,” the association added.