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Compliance September 19, 2011
EBSA to Re-Propose Definition of Fiduciary Rule
The U.S. Department of Labor’s Employee Benefits Security
Administration (EBSA) will re-propose its rule on the definition of a
fiduciary.
Reported by PLANADVISER staff
The decision to re-propose is due in part to requests from the public, including from members of Congress, that the agency allow an opportunity for more input on the rule, EBSA said in a news release.
Specifically, the agency anticipates revising provisions of the rule including, but not restricted to: clarifying that fiduciary advice is limited to individualized advice directed to specific parties, responding to concerns about the application of the regulation to routine appraisals (see “Law Firm Supports Making ESOP Valuators Fiduciaries“), and clarifying the limits of the rule’s application to arm’s length commercial transactions, such as swap transactions.
Also anticipated are exemptions addressing concerns about the impact of the new regulation on the current fee practices of brokers and advisers, and clarifying the continued applicability of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products.
The agency said it will carefully craft new or amended exemptions that can best preserve beneficial fee practices, while at the same time protecting plan participants and individual retirement account owners from abusive practices and conflicted advice.
The extended time frame for input will supplement more than 260 written public comments already received, as well as two days of open hearings and more than three dozen individual meetings with interested parties held by the agency (see “SIFMA Does Not Agree with DoL’s Reasoning,” “Fiduciary Policy Should Not “Impede” Common Interactions,” and “Subtracting “Surprise” from the Equation“). The extended rulemaking process also will ensure that the public receives a full opportunity to review the agency’s updated economic analysis and revisions of the rule.
EBSA said it will continue to coordinate closely with the Securities and Exchange Commission and the Commodities Futures Trading Commission to ensure that this effort is harmonized with other ongoing rulemakings.
The new proposed rule is expected to be issued in early 2012.