Legislative Action to Defund the DOL “Conflict-of-Interest” Fiduciary Rule
The Department of Labor’s proposed fiduciary rule is still under review (with a public hearing expected in mid-August), but its ability to affect change should it be enacted has been threatened by recent riders attached to U.S. Senate and House of Representative appropriations bills. For instance, the House rider stipulates that no monies from the Act may be used to “finalize, implement, administer or enforce the proposed Definition of the term “Fiduciary” under the proposed regulation.
These attempts to essentially “defund” the fiduciary rule are the latest in continued opposition to the rule, based on two key concerns: First, changing what constitutes a “fiduciary” potentially exposes service providers (financial advisers and brokers) to litigation from which they were previously immune. Secondly (and probably most significantly), the rule affects how and how much financial advisers and brokers would be compensated.
Although the appropriation bills have the support of Republicans (who control both houses of Congress), both President Obama and DOL Secretary Thomas Perez have spoken out staunchly in support of the fiduciary rule and both bills may be vetoed by the President. Stay tuned for continuing developments.