Charles Schwab is asking the Department of Labor to withdraw its fiduciary rule proposal, arguing that it is embarking on an “ill-fated sequel” to its now-vacated 2016 rule.

“We respectfully urge the Department to withdraw its proposal, rather than embark on an ill-fated sequel to its 2016 rulemaking in this area,” Peter Morgan, Schwab’s general counsel and managing editor, said in a January 2 comment letter to the DOL.

Morgan contended the proposal, which seeks to significantly expand who is a fiduciary advisor, “defies ERISA’s statutory text, exceeds the Department’s authority, and will curtail the availability of financial advice.”

Schwab is one of 18 critics that asked the DOL to extend its comment period on the 500-page proposal—a request the agency denied before closing comments on January 2.

House Republicans also have concerns and have launched a formal inquiry into the new 401(k) investment advice proposal. The House Financial Services Capital Markets Subcommittee announced it will hold a hearing to examine how the proposed rule would impact access to retirement savings on Wednesday, according to full committee Chair Patrick McHenry (R-N.C.).

The DOL proposal seeks to extend the definition of fiduciary to anyone advising retirement plan participants and individual retirement account owners for a fee.

It would also require that advisors provide investors with written analysis supporting their investment recommendations and seeks to narrow prohibited transaction exemptions registered reps and insurance agents have used for decades to exclude themselves from fiduciary responsibility when they charge a commission or fee.

Calling the proposal “a solution in search of a problem ... that is wrong as a matter of law and policy,” Morgan argued that it “is destined to meet the same fate as its 2016 predecessor.”

The Obama-era rule, which traces its origin to the Dodd-Frank financial reform legislation of 2010, was vacated in 2018 as a result of a legal appeal led by the U.S. Chamber of Commerce, the Financial Services Institute and SIFMA.

Morgan, who said that the DOL’s proposal “is little more than a do-over of the 2016 Rule,” argued that the agency’s definition is so expansive it “draws in countless circumstances where there is no relationship of trust and confidence.”

The term fiduciary “is not ambiguous, and may not be construed to capture broker-dealers and other financial professionals giving one-time advice. That the Department’s proposed definition would encompass such personnel is, therefore, a fatal flaw,” Morgan said.

The rule’s attempt to apply fiduciary status to advisors for certain investment transactions and strategies such as one-time rollovers and IRAs is also problematic, given that DOL lacks regulatory authority in these areas, Morgan said.

“The proposal circumvents statutory limits on the Department’s regulatory authority, which plainly does not extend to policing IRAs, as the Fifth Circuit held in Chamber of Commerce,” he added, noting that the inappropriateness of the proposal is even clearer today since the Supreme Court has repeatedly invalidated sweeping changes undertaken with clear statutory authority.

While the agency has a congressional mandate to regulate employer-sponsored benefit plans, it lacks authority to police individual retirement accounts, which are governed by the Internal Revenue Service, Morgan argued.