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DOL Fiduciary Rule Enforcement Officially Delayed

Estimated reading time: 1 minutes, 31 seconds

fiduciary rule enforcementWhen we last left the topic of the Department of Labor (DOL) Fiduciary Rule, it was facing yet another onslaught from Congress. Also, the Securities and Exchange Commission (SEC) discussed pushing a separate fiduciary standard.

But even with constant threats of modification, the chance of separate rules and additional attacks by outside parties, the DOL continued to conduct a review of the Rule’s impact on investment advice. As you might recall, President Trump ordered this review in a February 2017 memo.

On November 27, 2017, the DOL released a final rule delaying implementation of Fiduciary Rule enforcement mechanisms until mid-2019.

So what does this mean for investors, brokers and advisors? Essentially, the DOL postponed the applicability of a legally binding best interest contract (BIC) until July 1, 2019. The original plan was to begin requiring brokers act in their clients’ best interests on January 1, 2018.

According to the published document in the Federal Register on November 29, 2018, the DOL granted the delay because the department was concerned “that, without a delay in the applicability dates, consumers may face significant confusion, and regulated parties may incur undue expense to comply with conditions or requirements that the Department ultimately determines to revise or repeal.”

The Department also postponed other disclosure provisions and prohibited transaction exemptions. Other parts of the Rule effective on June 9 remain in effect, however.

Ultimately, the DOL said the longer delay is necessary to conclude its review of the Fiduciary Rule. Additionally, it gives the Department time to coordinate with the SEC (still working on its own rule) and state insurance regulators on setting advice standards. During this period, the Department will not pursue claims against fiduciaries “working diligently and in good faith to comply” with portions of the Rule already in place.

To read more about the Fiduciary Rule enforcement delay, read the published document in the Federal Register.