The U.S. Department of Labor’s effort to update its fiduciary rules – rules that protect Americans trying to save for retirement – has reached yet another new level. After asking the public for its thoughts on its proposal to close a loophole that, among other things, allows financial advisers to enrich themselves at the expense of their clients, the Department of Labor held an unprecedented week of public hearings on its proposed regulations. To supplement the Center’s comments, Maria Freese, PRC’s senior policy advisor testified that most Americans rely on financial advisors to provide “services based on the consumer’s best interest” and that the Center hopes the DOL will ensure that this is the case.
At the same time, some in Congress are attempting to short circuit an update to DOL’s fiduciary rule through legislation. Representative Ann Wagner (R-MO) introduced The Retail Investor Protection Act (HR 1090), which would prevent DOL from issuing its rule until the Securities and Exchange Commission (SEC) can issue a rule of its own. Many consider the Retail Investor Protection Act to be a delaying tactic promoted by the financial services industry to derail the DOL initiative because the SEC has barely begun the lengthy process of developing a rule. The bill passed the House by a vote of 245-186, but, due in part to intense lobbying by PRC and other members of the Save Our Retirement Coalition, there appears little Senate interest in taking up the bill.
In addition, at a recent hearing held by the House Ways and Means Committee Subcommittee Chairman Peter J. Roskam (R-IL) and Representative Richard Neal (D-MA) announced that they will be working together to draft legislation that would address the issue of conflicted investment advice. What they didn’t announce is that their plan amounts to yet another delaying tactic because, as the New York Times editorial board noted, they have also asked the Department of Labor to further delay issuing a final rule.
PRC will continue working with other consumer protection organizations through the Save Our Retirement Coalition to make sure this new threat to the DOL rulemaking process does not undercut DOL’s efforts to protect Americans trying to save for their retirement.