Delaying implementation of the Labor Department's fiduciary rule pending further evaluation by Labor, the Securities and Exchange Commission and the states will improve the regulatory framework for asset managers and insurers as well as the products and services they offer, the Treasury Department said in a report Thursday.
The report, "A Financial System That Creates Economic Opportunities: Asset Management and Insurance," is the third report issued by Treasury under Executive Order 13772, issued by President Donald Trump on Feb. 3. The order calls on Treasury to conduct an extensive review of existing financial rules, and then identify the laws and regs that are "inconsistent with the Core Principles" for financial regulation.
Indeed, the official 18-month delay of the fiduciary rule by Labor is expected to land at the Office of Management and Budget next week.
The first Treasury report on regulatory reform, released in June, also zeroed in on reducing overlap and duplication in federal regulation as well as reining in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The second report was released on Oct. 6 and included revisiting the "accredited investor" definition and re-examining the Jumpstart Our Business Startups (JOBS) Act.
The fourth report on nonbank financial institutions, financial technology and financial innovation is forthcoming.
To develop the reports, Treasury consulted with the member agencies of the Financial Stability Oversight Council, as well as a wide range of other stakeholders, including trade groups, financial services firms, consumer and other advocacy groups, academics, legal experts, and others with relevant knowledge.
"The regulatory framework for both the asset management and insurance industries can be significantly improved," said Treasury Secretary Steven Mnuchin, in releasing the report. "We are recommending more efficient and effective regulation to give consumers access to the products they need while providing individuals with opportunities to save for retirement."
In the 176-page report, Treasury states that it "supports current efforts" at Labor "to re-examine the implications of the revised fiduciary rule and related exemptions adopted by the DOL in April 2016," adding that a delay "in full implementation of the fiduciary rule is appropriate until the relevant issues are evaluated and addressed to best serve retirement investors."
Treasury continued that it "supports the SEC's engagement on this topic, and encourages the DOL and SEC to work with the states to evaluate the impacts of a fiduciary rule across markets."
As to the life insurance industry, Treasury said that it recognizes the "increasingly important role of the life insurance industry and its products in securing retirement income," and recommends "strengthening consumer access and choice with respect to annuities as investment options within employer-sponsored retirement plans such as 401(k) plans."
