The U.S. Department of Labor appears to be holding off on its plan to create another version of the fiduciary rule, according to an executive for the Securities Industry and Financial Markets Association (SIFMA).
"What we are now hearing is that they do not intend to issue anything anytime soon,” Lisa Bleier, general counsel for SIFMA, said at the group's private wealth conference yesterday.
The DOL announced plans to create yet another version of its fiduciary rule last year, but has been under pressure from securities industry lobbyists to avoid a reprise of the Obama-era fiduciary rule that was overturned in 2018.
Bleier said she believes the DOL has convinced the Biden administration to wait to see if new sales practice rules are effective first.
“Career staff at the DOL have been speaking publicly about the fact that they intend to offer up a new change to the definition of fiduciary, as well as changing some of the exemptions we currently use,” Bleier said. “So at SIFMA we have been pushing back through outreach to the [Biden] administration as well as many of the people who worked with us closely on Capitol Hill over the past several years."
Word of the DOL's hesitation "might mean that that they’ll wait until after the upcoming elections, but we do know we have to keep the pressure on," she said.
DOL spokesman Grant Vaught told Financial Advisor that “developing a rule addressing the definition of fiduciary continues to be a priority for EBSA [the Employee Benefits Security Administraton]. EBSA undertakes rulemaking in a deliberative fashion that carefully balances the interests of the regulated community and those they serve while taking every step to ensure the security of the retirement, health and other workplace-related benefits of America’s workers, retirees and their families," Vaught said.
Lobbyists from both SIFMA and the Financial Services Institute have taken the lead on the issue and met with House lawmakers’ staff in late February in an attempt to head off another DOL rule.
While the industry keeps its eye trained on new rulemaking activity, firms are operating under an existing DOL fiduciary rule that was passed in the final weeks of the Trump Administration and only went into effect in February.
The regulation provides an exemption that allows advisors to accept compensation that would otherwise be prohibited, including commissions and 12b-1 fees, as long as they act in the best interests of their customers.