Industry officials are at odds over whether the recent letter from four lawmakers telling Labor Secretary Thomas Perez to "repropose" the Department of Labor's fiduciary redraft is yet another stalling tactic or an attempt to get the rule right.
Four lawmakers told Perez in a Friday letter to repropose DOL's fiduciary redraft after the comment period expires on the 2015 version Labor released in April.
"As the Department is well aware, this proposal consists of extensive changes to an already complex and highly regulated framework regarding the investment advice market for retirement savings," wrote Rep. Ann Wagner, R-Mo., along with Reps. Andy Bar, R-Ky.; David Scott, D-Georgia; and Lacy Clay, D-Mo. "Such a rule will significantly change how millions of Americans seek help to make their investment decisions and the relationships that they have with their financial advisor."
The lawmakers ask for a "new formal rulemaking process," and state that "given the concerns from stakeholders and a bipartisan group in Congress on this issue, there is a strong possibility that a final rule may widely differ in its substance from the initial proposal or contain provisions that were not part of the proposed regulation."
As a result, they continued, "we feel it is in the interest of our constituents that the DOL repropose this fiduciary regulation to ensure adequate stakeholder involvement in the notice and comment period during a new formal rulemaking process."
The official comment period on the redraft expired on July 21, with a set of hearings on the redraft to be held the week of Aug. 10. The transcript of those hearings will then be released for a 14-day comment period.
Kent Mason, a partner with Davis & Harman, a Washington-based law firm that represents big financial companies, told ThinkAdvisor in a Tuesday email message that the letter from lawmakers is "a very constructive effort to try to get the rule right."
The 2015 proposal "is significantly less workable than the 2010 proposal, and would go even farther in jeopardizing access to investment and distribution assistance for low- and middle-income individuals and small businesses," Mason said. "In that context, a letter urging the DOL to repropose makes great sense as an important step toward ensuring that the final regulation helps individuals, rather than adversely affecting them."
But Barbara Roper, director of investor protection for the Consumer Federation of America, argued in her email to ThinkAdvisor that "there is absolutely no reason for the DOL to restart this process."
DOL, Roper says, has "provided, and continues to provide, ample opportunity for input from all stakeholders. We are confident that they will use that input to craft a final rule that addresses legitimate concerns and ignores the self-interested hype from those intent on maintaining the status quo."
Mason predicts at the close of the post-hearing comment period (likely in mid-September), DOL "will be working on finalizing the regulation," with DOL aiming to publish the final regulation around March 2016.
