Republicans are urging the Labor Department to drop a proposal to expand fiduciary responsibilities for retirement advisers, a sign that a battle over the deep-rooted partisan issue is erupting.
Senator Bill Cassidy (Louisiana) and Rep. Virginia Fox (Virginia) hold leadership positions on the Senate and House committees that oversee the Labor Department. They argue that new efforts to redefine what it means to be a trustee under the Employee Retirement Income Security Act will limit the availability of investment advice, and the department has mixed views on the issue. It is sending out signals, which it claims are causing chaos in government agencies. industry.
“Over the past two years, the Department has endorsed at least three different positions on what it means to be a fiduciary of investment advice,” Cassidy and Fox wrote. “The ministry’s consistent failure to articulate its position is creating unnecessary instability for retirement plans, retirees and savers.”
They pointed to the Obama-era DOL fiduciary regulation that industry groups sued to overturn and ultimately won when the Fifth Circuit Court of Appeals rescinded the rule. The experience “should set an alarming example,” write Cassidy and Fox.
The DOL outlined its current rulemaking initiatives when it announced its spring regulatory agenda, with a target date of August for publication. The proposed rule has yet to be fleshed out, but the ministry included the following proposals: summary amid regulatory challenges.
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“This rulemaking amends the regulatory definition of the term fiduciary to better define when a person who provides investment advice for a fee to an employee benefit plan or IRA is a fiduciary. We will have to define it,” the ministry said.
“The proposed amendments would take into account developments in the investment market, including the practices of investment advisors, the expectations of planning parties and participants, the expectations of IRA owners receiving investment advice, and even how advisors are compensated. It’s a conflict of interest,” said the DOL.
A representative for the DOL did not immediately respond to a request for comment on the status of the proposal or the Cassidy-Fox letter.
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Duane Thompson, president of the consulting group Potomac Strategies, said the letter’s practical impact was limited, but any efforts to redefine fiduciary status under Elisa (which he called ” “It’s a very partisan question,” he said. with strong political opposition.
“It doesn’t change the policy dynamics,” Thompson said. “If the DOL decides to propose an amendment to the trustee definition, it will repeat the Fifth Circuit decision that invalidated the 2016 rule, in other words, to avoid political warnings beyond the bow. I don’t think this letter will deter the DOL’s plans to introduce new rules.”
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