On August 9, 2017, the Department of Labor (“DOL”) stated in a court filing that the Office of Management and Budget (“OMB”) is reviewing a proposal to extend the applicability date for certain requirements under DOL’s fiduciary rule until July 1, 2019. As discussed here and here the fiduciary rule’s “impartial conduct standards” have been in effect since June 9, 2017; but other requirements, including the written contract required under the Best Interest Contract exemption and certain disclosure requirements, have been delayed pending DOL’s review of the rule. DOL’s request suggests that DOL will need significantly more time to complete its review of the rule.
The delay will not be official unless and until it is approved by OMB—a process that can take as long as 90 days. In the meantime, the fiduciary rule’s “impartial conduct standards” remain in effect. This means that investment advice (defined under the new regulation’s broad definition) is subject to the following standards:
- Any recommendation (defined under the new broad definition) must be in the best interest of the investor, meaning that it must be based on the investor’s investment objectives, risk tolerance, and financial circumstances (and not financial considerations of the fiduciary);
- A fiduciary must not make misleading statements about investment transactions, compensation, or conflicts of interest; and
- A fiduciary may not charge more than a reasonable amount for services.
The most recent period for submitting comments on the fiduciary rule ended on August 7, 2017. DOL received over 500 comments, available here. In addition to addressing the delay, the comments addressed a number of substantive issues under the regulation and exemptions. DOL will be reviewing the comments to decide what changes, if any, should be made to the final rule and exemptions.