The rush is on for yet another version of the fiduciary rule.
Just 13 days after issuing its more than 500 page proposal for comment, the U.S. Department of Labor has announced it will hold two or more days of online hearings beginning December 12. The public comment period on the proposal ends January 2, 2024.
The DOL’s fast-moving schedule was announced despite opposition from 18 financial services trade groups, which jointly wrote the department on November 8 to ask for additional time to respond to the proposal.
While much of the industry is already adhering to a fiduciary standard, the proposal seeks to extend fiduciary requirements to commissioned-based brokers, reps and insurance agents who charge compensation for offering advice even once to retirement plan participants and IRA owners. Currently, the professionals are able to use “prohibited transaction exemptions” to sidestep a fiduciary standard, which requires that they put customer interest first, before their own compensation or the interests of a company.
The proposed rule would also require all professionals to provide written analysis justifying rollovers to customers.
“Considering that DOL has spent almost three years crafting the proposed rule, it strikes us that affording all interested stakeholders sufficient time to provide meaningful feedback would be in DOL’s interest,” said a letter written by the coalition of trade groups, which includes the Financial Services Institute, the Securities Industry and Financial Markets Association, and the Insured Retirement Institute.
The proposed rule “makes significant and unanticipated changes to the current regulatory framework that will require significantly more time for meaningful analysis and comment,” the coalition argued.
Public hearings are typically held after an agency receives comments and closed the comment period, but in this case, the trade groups complain, the hearings are being accelerated and held before many industry players have had a chance to develop their arguments (and while the comment period is still open).
Fred Reish, an ERISA attorney and partner with Faegre Drinker, told Financial Advisor magazine that the DOL has denied extensions.
Some lobbyists guess the Biden administration wants the DOL to rush so it can beat the clock before the 2024 presidential election, though Reish said that isn’t the department’s official reason for moving so swiftly.
“Instead, the DOL is pointing out that most of the issues have been discussed robustly over the years since the 2016 regulation and exemptions, and that it is already receiving comments and meeting requests consistent with the current time line,” he said.
Lisa M. Gomez, head of the Employee Benefits Security Administration, said in a statement that “the hearing will provide interested parties with a full opportunity to provide important public input that will inform the Department of Labor’s next steps in the rule-making process for the proposal.”
The online hearings will be held December 12-13 and, if necessary, continue December 14. The hearings begin at 9 a.m. Eastern time.
Those interested in testifying at the hearing must submit a request to the department at www.regulations.gov on or before November 29, 2023.
