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Regulation and Exemptions
Definition of the Term "Fiduciary" & Related Exemptions – Proposed Delay of Applicability Dates
The Department of Labor (DOL) has proposed a delay in the applicability date of its Fiduciary Rule to June 9, 2017 in order to complete a review of the Rule which was ordered by President Trump. On February 3, 2017, President Trump issued a memorandum asking the DOL to rescind or revise the Rule if it concluded that the Rule would adversely affect investors in any of the following three areas: 1) access to retirement products or advice, 2) dislocations or disruptions in the retirement services industry, or 3) increase in litigation and prices for retirement services. Opponents of the Rule hope that the proposed delay will be followed by further moves to rescind or revise the Rule in response to the President’s memorandum.
The DOL’s delay proposal is subject to public comments due by March 17, 2017, while public comments raised by President Trump’s memorandum are due by April 17, 2017.
Due to the uncertainties associated with the delay, the DOL has issued a policy to grant relief to firms for compliance violations that may occur as a result of such uncertainties. There are two instances for which with the DOL will grant temporary relief to firms under this policy:
If the DOL delays the Rule, but a final delay is not issued until after the April 10th applicability date, the DOL will not enforce violations that occurred during that “gap” period.
If the DOL does not delay the rule, the DOL will not initiate an enforcement action for failure to satisfy conditions of the Rule by April 10th provided that the firm complies with the Rule within a reasonable period after the publication of a decision not to delay the April 10th applicability date.
Presidential Memorandum on Fiduciary Duty Rule
MEMORANDUM FOR THE SECRETARY OF LABOR
SUBJECT: Fiduciary Duty Rule
One of the priorities of my Administration is to empower Americans to make their own financial decisions, to facilitate their ability to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, such as buying a home and paying for college, and to withstand unexpected financial emergencies.
Term "Fiduciary"; Conflict of Interest Rule Retirement Investment Advice, 81 Fed. Reg. 20946 (April 8, 2016) (Fiduciary Duty Rule or Rule), may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of my Administration.
Accordingly, by the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby direct the following:
Section 1. Department of Labor Review of Fiduciary Duty Rule. (a) You are directed to examine the Fiduciary Duty Rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice. As part of this examination, you shall prepare an updated economic and legal analysis concerning the likely impact of the Fiduciary Duty Rule, which shall consider, among other things, the following:
(i) Whether the anticipated applicability of the Fiduciary Duty Rule has harmed or is likely to harm investors due to a reduction of Americans' access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice;
(ii) Whether the anticipated applicability of the Fiduciary Duty Rule has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees; and
(iii) Whether the Fiduciary Duty Rule is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.
(b) If you make an affirmative determination as to any of the considerations identified in subsection (a) or if you conclude for any other reason after appropriate review that the Fiduciary Duty Rule is inconsistent with the priority identified earlier in this memorandum then you shall publish for notice and comment a proposed rule rescinding or revising the Rule, as appropriate and as consistent with law.
Sec. 2. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) You are hereby authorized and directed to publish this memorandum in the Federal Register.
DONALD J. TRUMP
Source: The Department of Labor: https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/completed-rulemaking/1210-AB32-2
Source, Whitehouse.gov : https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-memorandum-fiduciary-duty-rule