The Consumer Federation of America, one of the most vociferous supporters of the DOL’s fiduciary rule, says the department is planning to gut the most important provisions of the rule.

In a comment letter dated Friday and posted on the CFA’s website, Micah Hauptman, CFA financial services counsel, and Barbara Roper, CFA director of investor protection, argue that the DOL’s most recent proposal to extend the implementation date to July 1, 2019, is actually a stay of the rule, not a delay.  

The distinction is important, they say, because stays of pending rules are only allowed in certain circumstances enumerated under federal law, and the DOL has not made a case for such a stay.

“It appears the DOL wants to make sure the operational requirements of the rule don’t kick in, and that’s effectively a revocation, and they can’t do that” without proper justification, Hauptman told Financial Advisor magazine.

The CFA was responding to the DOL’s most recent action, a request for comments published late last month on the proposed delay to July 2019. That request makes clear that the department intends to essentially kill the rule, the CFA says, by adding language that the DOL could ultimately “revise or repeal” the fiduciary proposal.

The DOL is “on shaky territory” in claiming its action is simply a delay, Hauptman said.

“We’re not ruling anything out,” he said about a possible legal challenge. “It depends on what they do going forward, [but] we’re not taking anything off the table.”

DOL spokesman Michael Trupo declined comment.

Meanwhile, the investment industry has urged the DOL to extend its proposed delay even further.