The Department of Labor’s fiduciary rule is a “big government scheme,” charges Phil Roe (R-Tenn.), chair of a pension subcommittee of the House Education and Workforce Committee.

Roe, chair of the Subcommittee On Health, Employment, Labor and Pensions, claimed on Wednesday that the rule would strip financial advisors from “a lot” of retail investors.

“It would cut off a vital source of support many low- and middle-income families and small business owners rely on,” said Roe.

He referred to the rule as a “big government scheme.”

The full committee’s chair John Kline (R-Minn.) called the rule unworkable.

Responding in a tweet to Kline’s remark, Consumer Federation of America Director of Investor Protection Barbara Roper said, “The industry has said it, so it must be true.”

Labor Secretary Tom Perez, citing the potential for $40 billion in savings for investors over 10 years, said “the stakes could not be higher.”

He said the department will clarify the final rule so that it is obvious an investor doesn’t have to sign a contract before speaking with an advisor. Perez acknowledged the current rule creates confusion on this issue.

Investment Company Institute Chief Economist Brian Reid attacked DOL’s assertion that investors are losing billions from excess fees and underperforming mutual funds with front-end loads sold by brokers.

“Investors who own funds that are sold with front-end loads have concentrated their assets in funds that outperform -- not underperform -- the average return for their fund category,” said Reid.

In a blog, Financial Services Roundtable President and CEO Tim Pawlenty called the fiduciary proposal “a bull rush of red tape.”

The former Republican primary presidential candidate and Minnesota governor said the DOL proposal would counter the Obama’s administration’s professed goal of expanding access to workers who lack workplace savings plans by discouraging small employers from starting and maintaining them.

Shortly before the hearing started, the Financial Planning Coalition issued a statement praising the proposed rule as comprehensive and carefully constructed to secure critical protections for American retirement savers. It added the rule would preserve financial advisors’ flexibility and adaptability, regardless of business model.

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