The Department of Labor’s proposed fiduciary rule is a misguided approach fraught with serious risks, costs and uncertainties for retirement investors and for the banks and other organizations that supply retirement services, ABA said today in comments to House lawmakers. The association recommended that the DOL withdraw the proposal.
The House Financial Services Subcommittee on Capital Markets held a hearing on the proposed rule, which would extend fiduciary status to advice on rollovers and investments related to commodities and insurance products like fixed annuities. In a statement submitted for the hearing, ABA said the definition of “fiduciary” is a foundational element of the Employee Retirement Income Security Act. Therefore, any revision to that definition must convincingly demonstrate a compelling need for such a change and employ the “least burdensome tools” to accomplish its objectives, and the proposed rule does neither, the association said.
“On the contrary, we believe that the proposal is overbroad and overreaching, and that it captures numerous persons and entities who provide valuable services to plans, plan fiduciaries, plan participants and beneficiaries, and IRA owners but who should not be viewed as, nor reasonably considered to be, a ‘fiduciary’ under ERISA and the [tax] code,” ABA said. “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.”
