DOL wants more public input on Fiduciary Rule
The Department of Labor released yet another “request for information” (RFI) on the agency’s controversial fiduciary rule on June 29, this one seeking input on whether or not to delay the Jan. 1, 2018 full implementation date and seeking suggestions for modifying the rule’s major provisions.
The deadline for submitting comments about extending the Jan. 1 applicability date is 15 days from the request’s July 6 publication in the Federal Register – meaning interested parties have until July 21 to comment on that particular topic.
Comments in response to all other questions (more on the questions below) in the RFI must be submitted by Aug. 7, 2017.
The Employee Benefits Security Administration (EBSA) within the DOL published the RFI in connection with its examination of the final rule defining who is a “fiduciary” of an employee benefit plan for purposes of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code, as a result of giving investment advice for a fee or other compensation with respect to assets of a plan or IRA (Fiduciary Rule or Rule).
The examination also includes the new and amended administrative class exemptions from the prohibited transaction provisions of ERISA and the Code that were published in conjunction with the Rule (collectively, the Prohibited Transaction Exemptions or PTEs). This RFI specifically seeks public input that could form the basis of new exemptions or changes/revisions to the rule and PTEs, and input regarding the advisability of extending the January 1, 2018, applicability date of certain provisions in the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, and Prohibited Transaction Exemption 84-24.
Recent event recap
Back on April 7, the DOL promulgated a final rule extending the applicability date of the Fiduciary Rule by 60 days from April 10 to June 9. It also extended from April 10 to June 9, the applicability dates of the BIC Exemption and Principal Transactions Exemption, and required investment advice fiduciaries relying on these exemptions to adhere only to the Impartial Conduct Standards as conditions of those exemptions during a transition period from June 9 through January 1, 2018.
In this manner, the Department established a phased implementation period from June 9 until January 1, 2018, during which time the Fiduciary Rule will be applicable, and these new exemptions will be available subject to the Impartial Conduct Standards only.
The final rule further delayed the applicability of amendments to an existing exemption, Prohibited Transaction Exemption 84-24, until January 1, 2018, other than the Impartial Conduct Standards, which became applicable on June 9, 2017. Finally, the final rule extended for 60 days, until June 9, 2017, the applicability dates of amendments to other previously granted exemptions.
On May 22, the DOL issued a temporary enforcement policy covering the transition period between June 9 and January 1, 2018, during which the Department will not pursue claims against investment advice fiduciaries who are working diligently and in good faith to comply with their fiduciary duties and to meet the conditions of the PTEs, or otherwise treat those investment advice fiduciaries as being in violation of their fiduciary duties and not compliant with the PTEs. The Treasury Department and IRS confirmed a similar enforcement policy covering excise taxes and related reporting obligations with respect to transactions covered by the Department's enforcement policy. The Department also published on May 22 a set of FAQs to provide additional information on the transition period from June 9 to January 1, 2018. The DOL noted in both the temporary enforcement policy and FAQs that it intended to issue a RFI for additional public input on specific ideas for possible new exemptions or regulatory changes based on recent public comments and market developments.
The DOL is still in the process of reviewing and analyzing comments received in response to its March 2, 2017, request for comments on issues raised in the Feb. 3 memo from President Trump. Now the DOL wants additional input from the public about possible additional exemption approaches or changes to the Fiduciary Rule, as well as regarding the advisability of extending the January 1, 2018, applicability date of certain provisions in the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, and Prohibited Transaction Exemption 84-24.
Public input on the Fiduciary Duty Rule and PTEs has suggested that it may be possible in some instances to build upon recent innovations in the financial services industry to create new and more streamlined exemptions and compliance mechanisms.
Next page: List of questions being asked
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