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Compliance January 22, 2009
White House Executive Order Snares Fee Disclosure, Advice Regs
An order from White House Chief of Staff Rahm Emanuel will delay two Department of Labor (DoL) fee disclosure regulations and possibly slow down a recently published advice regulation.
Reported by Fred Schneyer
The January 20 order signed by Emanuel ordered a temporary moratorium on new federal rules. A report in The Washington Post said agencies were ordered to pull back all proposed or final regulations that have not been published in the Federal Register so they can be “reviewed and approved by a department or agency head.”
Caught up in the order to stop processing unpublished rules are pending DoL proposed directives requiring service providers to disclose fees, compensation, and conflicts of interest to fiduciaries of 401(k) and other benefit plans (see “EBSA Releases Proposed Revisions to Provider Fee Disclosures’). DoL also released a proposed fee disclosure regulation for participant-directed individual account plans on July 23 (see “EBSA Issues New Participant Disclosure Regulations’).
Both were still reported to be in process at the federal Office of Management and Budget (OMB)—which has to approve new federal rules—but had not been published in the Federal Register by Inauguration Day.
The Emanuel memo also asked department and agency heads to consider putting off the effective date of published rules not yet in effect. Emanuel’s order might put off the implementation date of the DoL’s recently released final rule governing the providing of a retirement plan investment advice (see “DoL Finalizes Investment Advice Rule’).
Advice Bill Opposition
The advice rule was published January 21 and was originally scheduled for a March 23 effective date. The rule implements the new statutory exemption for investment advice added to the Employee Retirement Income Security Act (ERISA) by the Pension Protection Act (PPA) and a related class exemption.
However, the advice rule might run into problems because of significant opposition from House Education and Labor Committee Chairman George Miller (D-California) who has vowed to block it (see “Miller, Andrews Threaten to Block Advice Regulation’).
The Washington Post said the directive from Emanuel has become a tradition among presidents going back to Ronald Reagan in 1981. The newspaper pointed out that George W. Bush and Bill Clinton had similar orders issued at the outset of their administrations.
The Emanuel memo is available here.
The advice regulation is available here.