Bill to Stop DOL Fiduciary Rule Passes House

Washington Analysis noted in its Tuesday commentary that while the budget deal is "not yet final and changes could still be made," language to defund and block DOL's fiduciary rule is not included in the budget bill, which is expected to be considered by Congress on Wednesday.

Marilyn Mohrman-Gillis of the Certified Financial Planner Board of Standards told ThinkAdvisor on Tuesday that "there could be other initiatives" to derail DOL's rulemaking, noting Wagner's threat to stop DOL's rule through an amendment to an appropriations bill. "We are monitoring everything."

Industry groups were busy sending letters to House leaders Tuesday morning before the full House took up Wagner's bill. The Financial Planning Coalition — comprising the Financial Planning Association, the CFP Board and NAPFA — urged Democratic members Tuesday to oppose H.R. 1090, which the Coalition dubs "the dubiously titled" bill that would stop DOL from issuing "a much-needed rule to protect American retirement savers."

The Coalition notes that Wagner's bill would prohibit DOL from "fully realizing Congress' intent" under the Employee Retirement Income Security Act "to provide fiduciary advice to retirement savings until two months after" the SEC issues a rule under securities laws to extend the fiduciary standard to broker-dealers.

However, as the Coalition told lawmakers, an SEC rule may never come. "The SEC is not required to issue a fiduciary rule for broker-dealers," the Coalition wrote, and the agency "has yet to propose a rule (over five years since Congress authorized it to issue a rule), and it may never do so."

Dennis Kelleher, president and CEO of Better Markets, argued that the SEC "does not even have the legal authority to update rules on advice about retirement accounts," and that the agency "hasn't even begun its own rulemaking process, which would take years to complete."

Indeed, David Grim, director of the SEC's Division of Investment Management, told House lawmakers last Friday that while the IM division is busy developing a uniform fiduciary rule for advisors and brokers, he couldn't say when such a plan would go before the Commission.

Kelleher said that Lynch "has the right idea in his amendment: allowing the DOL to finalize its long overdue rule, and requiring the SEC to finally act to replace its weak rules that fail to protect securities investors from conflicted securities advice."

The Coalition conceded to lawmakers that "while there are modifications and clarifications that are needed to make it more operational, the DOL has indicated its intent to streamline the final rule."

Former Minnesota Gov. Tim Pawlenty, who now heads the Financial Services Roundtable, noted in the FSR letter sent Tuesday to Pelosi and House Speaker John Boehner that "federal regulatory efforts" on fiduciary advice should "begin with the industry's primary regulator," the SEC. FSR members, Pawlenty said, "have expressed deep concern that DOL's procedural approach is overly complicated and will limit investment choices to modest income consumers."