Signs point to the Office of Management and Budget approving a final interim rule delaying the Department of Labor fiduciary rule — possibly as early as this week.
The DOL delay request – sent to the OMB two weeks ago – can take two forms, a proposed rule or an interim final rule. The biggest difference is the timing of required public comment.
A proposed rule requires public comment before it can be published, while an interim final rule can be published first, with comment taken afterwards, said Erin M. Sweeney, a lawyer with Miller & Chevalier in Washington, D.C.
“My prediction is that this would be an interim final rule because the DOL needs to announce the delay as soon as possible,” she said.
Extending the applicability date will give the Trump administration DOL more time to change the rule to its liking. The fiduciary rule extends a best-interest standard of care to anyone investing or doing financial planning with retirement dollars.
Industry opponents say the rule comes with so many added costs that advisors will not be able to service the small savers who need advice the most.
OMB received the delay request Feb. 9. It has since been meeting with primarily pro-rule groups such as AARP. Meetings are typically set up by OMB, Sweeney said.
“In the meetings I attended, OMB asked questions about process, alternatives considered, and the cost/benefit analysis,” said Sweeney, referring to her past rulemaking experiences as senior benefit law specialist for the Office of Regulations and Interpretations at the DOL.
The DOL rule is set to begin taking effect April 10, but sources say the DOL asked OMB to approve a 180-day delay.
In his first action on the DOL rule, Trump directed the DOL to seek a delay to assess whether the rule has:
- Harmed or is likely to harm investors due to a reduction of access to certain retirement savings products, accounts or information.
- “Resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees.”
- “Is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.”“I think it is too soon to predict the outcome of this process,” she said. “If they conduct a fair review of the rule based on the core principles and criteria identified in the presidential memorandum, the only reasonable outcome will be to allow the rule to move forward as drafted.”
- Barbara Roper, director of investor protection for the Consumer Federation of America, attended a meeting today with OMB. A rule proponent, she is cautiously optimistic.
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