Lawmakers Advance Two Measures to Kill DOL Fiduciary Rule

Photo illustration of Labor Department with President Joe Biden and Acting Labor Secretary Julie Su

The House Education and Workforce Committee passed by a 23-18 vote Wednesday a Congressional Review Act resolution to disapprove the Labor Department's new fiduciary rule.

Labor's rule "represents a reckless overreach by the Biden administration," Rep. Virginia Foxx, R-N.C., chairwoman of the committee, said Wednesday during the markup.

The resolution, which would prevent the regulation from taking effect, moves to the full House.

The House Appropriations Committee also approved by a 31-25 vote Wednesday the Fiscal Year 2025 Labor, Health and Human Services, Education, and Related Agencies bill. The legislation would prevent Labor from using any funds to administer, implement or enforce its new fiduciary rule and related prohibited transaction exemptions.

The Congressional Review Act allows Congress to overturn rules issued by a presidential administration through a joint resolution of disapproval. The resolution must pass the House and Senate and be signed by the president, or Congress must override the president's veto.

The resolution, H.J. Res. 142, is sponsored by Rep. Rick Allen, R-Ga., and has 31 co-sponsors.

Labor's 2024 rule "is substantially similar to the ill-advised 2016 rule and will have a similar negative impact on low- and middle-income workers," Wayne Chopus, president and CEO of the Insured Retirement Institute, said Wednesday in a statement.

"In its rush to adopt this rule, the DOL ignored sound evidence of its harmful effects as well as the actions taken by federal and state regulators since 2020 to enhance the regulation of financial professionals," Chopus said.

Rep. Bobby Scott, D-Va., ranking member on the Education and Workforce committee, voted against the resolution.

"Unfortunately, unscrupulous financial advisors can steer their retirement clients into high-fee products that are not in the client's best interest but are in the interests of the financial advisor," Scott said. "This is what's known as conflicted advice, and it's harming retirement savers."

The Biden-Harris administration's Retirement Security Rule "would end this insidious practice and help ensure workers, retirees, and retirement plan sponsors receive advice that's in their best interests. I'm surprised that the concept is apparently controversial," Scott added.

According to Morningstar, Scott continued, "retirement plan participants would save over $55 billion in the first 10 years after implementation and over $130 billion in the 10 years after that, just by getting information that's in their best interest, not in the best interest of the financial advisors."

Insurance Groups Weigh In

The American Council of Life Insurers, National Association of Insurance and Financial Advisors, IRI, National Association for Fixed Annuities and Finseca, said Wednesday in a joint statement that "the actions taken today by the U.S. House Appropriations Committee and the Education and the Workforce Committee send a clear message that the Labor Department's fiduciary-only regulation does not align with Congress's efforts to expand retirement security for all Americans through the increased availability of lifetime income options."