A committee chair of the U.S. House of Representatives has waded into the fight over a controversial new proposed rule by the Department of Labor that would affect the ways certain reps give advice even on onetime transactions like IRA rollovers.
Virginia Foxx, the powerful chair of the House’s Committee on Education and the Workforce, wants to know why the DOL hasn’t allowed trade groups the extra time they have requested for comment on the proposed “fiduciary rule” and its ramifications for commission-based reps in the financial services industry. She said the acting secretary of labor turned down requests for extra comment time, and Foxx wants to know why.
“Any regulations that could alter the methods and relationships currently delivering retirement advice to American workers will have far-reaching implications,” said Foxx, a North Carolina Republican. “It is critical that stakeholders are afforded the opportunity to evaluate and provide substantive and informed comments on the proposal.”
Foxx made these comments in a November 17 letter to Julie Su, the acting secretary of labor. Foxx’s committee has jurisdiction over ERISA issues.
Foxx requested that the DOL extend its public comment period on the proposal by 60 days for a total of 120 days. She also wants the DOL to hold its public hearing on the proposal 30 days after the close of the initial comment period and open a second 30-day comment period after the hearing.
Foxx gave Su a deadline of November 27, 2023, to respond to her request.
She said she was concerned that Su had turned down a consortium of 18 trade associations that had asked for an extended comment period.
The consortium includes the Financial Services Institute and the Securities Industry and Financial Markets Association, which complained that the DOL gave the public only 39 working days to comment (interrupted by multiple federal holidays).
“This time is inadequate for the retirement community to digest the consequences of the proposal fully and to provide meaningful feedback,” Foxx said.
As of right now, the DOL has given commenters a deadline of January 2, 2024. Just 13 days after issuing the 500-page fiduciary proposal, the department announced online hearings beginning December 12.
Lisa M. Gomez, head of the Employee Benefits Security Administration, said “the hearings 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.”
Foxx disagrees. “This hearing falls before the close of the comment period, which is already insufficient for stakeholders to weigh the ramifications of the sweeping proposal appropriately,” the chair noted.
Foxx has requested that the DOL’s public hearing be moved to “no less than 30 days after the comment period has closed” and all comments have been publicly posted.
The extra 30 days between the hearing and the close of comments is critical, Foxx wrote, “to allow the affected community, and the hearing participants in particular, to formulate their comments and to review and consider comments filed by others.”
In her letter to Su, Foxx also argued that DOL may be violating the Administrative Procedure Act (APA), since its notice-and-comment period indicates the agency seems to have “a predetermined outcome” in mind.
Foxx wrote that she thought, apparently, the Employee Benefits Security Administration had “designed the comment period to prevent fulsome interaction with the community that would be charged with implementing its disastrous proposal.”
The new rule would require investment advice fiduciaries to give advice that meets a professional standard of care or duty of prudence and offers a definition of “investment advice fiduciary.”
