On November 27, 2017, the Department of Labor (“DOL”) finalized the delay of the applicability date for certain conditions for exemptions to the fiduciary rule until July 1, 2019. This delay was initially proposed in late August as described here.
Although certain requirements have been delayed, the fiduciary rule’s broad definition of “fiduciary” and the “impartial conduct standards” continue in effect, subject to a good faith compliance standard. (Those requirements have been in effect since June 9, 2017.) Consequently, financial institutions and advisers continue to be subject to requirements to give prudent advice that is in the retirement investor’s best interest, charge no more than reasonable compensation, and avoid misleading statements. But other requirements, including the written contract required by BIC Exemption and certain disclosure requirements, have been delayed pending DOL’s review of the rule.
DOL’s stated reason for the delay is that it has not yet completed its reexamination of the fiduciary rule and exemptions, as directed by the President in his February 3, 2017 memorandum, including its review of hundreds of comments that it received from stakeholders. In addition, DOL stated that it intends to use the additional time to consult further with other regulators, including the National Association of Insurance Commissioners and the SEC.
By continuing the status quo during the review period, DOL appears to be allowing the rule’s core principles to grow roots. At the same time, however, DOL has suggested that it intends to make significant changes to the compliance details. First, DOL has stated that it anticipates proposing a new streamlined class exemption in the near future. Second, DOL has made clear that it does not want stakeholders to incur additional costs to comply with conditions that DOL might revise, repeal, or replace.