The Department of Labor's estimates of what its proposed fiduciary rule would cost broker-dealers in compliance are based on "arbitrary" and "capricious" calculations that dramatically lowball reality, according to a comment letter by the U.S. Chamber of Commerce.
The DOL's preliminary regulatory impact analysis, released with the proposed rule in April, estimated "information collection burdens" the rule would place on broker-dealers and advisors.
Those costs, accounted for largely by new disclosure requirements, will run broker-dealers $792 million over 10 years, or about $72 million annually.
The Chamber thinks that number is woefully low. In a comment letter sent to the DOL last month, it puts the actual administrative costs to be five to 10 times higher.
The Paper Reduction Act of 1995 requires the DOL and other regulators to assess the administrative cost of regulation on affected stakeholders, in order to weigh the cost-benefit of rules on businesses and consumers.
In the case of the DOL's rule, an accurate estimation of the price tag of new disclosure requirements is necessary the gauge whether the cost of the rule doesn't exceed its benefits, and to assure that "regulations do not cause more harm than good," according to the Chamber's comment letter.
"Questionable" assumptions are made throughout the DOL's analysis and come with no proof or empirical evidence, claims the letter.
