DOL Issues Temporary Enforcement Policy on Fiduciary Rule

EBSA noted in the bulletin that "many financial services firms and advisors are concerned that, if the Department decides not to issue a delay, there may not be sufficient time to provide retirement investors before the April 10 applicability date with disclosures or other documents intended to comply with the transition period relief in the [best interest contract] exemption, the independent fiduciary exception in the rule, or other disclosure provisions of the rule or the PTEs," EBSA said.  

Moreover, EBSA continued, "we understand that in order to comply with the BIC exemption in the unlikely event of a 'gap' period or if the department decides not to issue a delay, some financial services firms and advisors are considering distributing communications to existing retirement investor clients and potential plan and IRA customers that, among other things, include language regarding an uncertain applicability date and conditional acknowledgements of fiduciary status, i.e., that the firm will be a fiduciary but only if the rule becomes applicable."

Because of these transitional and other concerns, the Department said that it is adopting the following temporary enforcement policy:

1. In the event the department issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the department will not initiate an enforcement action because an advisor or financial institution did not satisfy conditions of the rule or the PTEs during the "gap" period in which the rule becomes applicable before a delay is implemented, including a failure to provide retirement investors with disclosures or other documents intended to comply with provisions of the rule or the related PTEs.
2. In the event the department decides not to issue a delay in the fiduciary duty rule and related PTEs, the department will not initiate an enforcement action because an advisor or financial institution, as of the April 10 applicability date of the rule, failed to satisfy conditions of the rule or the PTEs provided that the advisor or financial institution satisfies the applicable conditions of the rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a reasonable period after the publication of a decision not to delay the April 10 applicability date. 

 — Check out Quick Action on DOL Fiduciary Rule Unlikely With Acosta Confirmation on ThinkAdvisor.