The Department of Labor’s proposed expansion of its investment advice regulation—known as the fiduciary rule—is overbroad, overreaching, and would make it much more difficult for banks to deliver products and services to customers saving for retirement, the American Bankers Association said today in a letter to the agency. The association urged DOL to withdraw the proposal and research regulatory alternatives that are less costly and burdensome.
The proposed rule would expand the definition of fiduciary under the Employee Retirement Income Security Act and federal tax code to include a wide range of entities previously not covered, such as persons who provide services to plans, plan fiduciaries, plan participants and beneficiaries, and IRA owners. In its letter, ABA said that when acting in a fiduciary capacity, banks have always sought the best interest of their retirement customers and take great pride in successfully serving their customers’ retirement needs. Any structural changes to the definition of “fiduciary” will fundamentally affect the availability and delivery of retirement products by ABA member banks, which calls for measured, targeted, and sensible rulemaking not found in the current proposal, it added.
“If adopted in its current form, the proposal is likely to harm the very plans, plan participants and beneficiaries, and IRA account owners that the department is seeking to protect by making it extremely and unnecessarily difficult, complex and costly for banks to make and deliver the products, services and information necessary, helpful and appropriate for achieving a financially sound retirement,” ABA said. “As a result, the retirement planning benefits provided to these institutions and individuals will be significantly reduced or altogether eliminated.”