Congressional Democrats broke ranks with the White House this week, asking the Department of Labor to extend the review period on its fiduciary proposal. President Obama and his administration have backed the DOL's efforts to rein in retirement plan brokers, but he has struggled to win the support of congressional Democrats.
In a letter to Labor Secretary Thomas Perez, 18 House of Representatives members asked the DOL to extend the current 75-day public comment period on its fiduciary proposal by an additional 45 days. The Congressmen don't believe 75 days is an adequate amount of time to review the rule.
The public got its first look on April 14 at the DOL’s long-awaited proposed fiduciary rule for advisors to retirement accounts. The proposal included several exemptions designed, Perez said, to protect investors while providing flexibility to financial advisors.
The biggest change from the earlier 2010 may be the "best interest contract exemption." Instead of a five-part test to determine if an advisor is properly acting as a fiduciary under ERISA, the new exemption would require advisors and firms who want to receive certain types of compensation to "formally commit" to clients they will put their best interests first, Perez said.
This new “best interest contract” aspect of the proposal, as well as the proposal’s regulatory impact analysis, has the 18 members of Congress concerned.
“Considering the importance, scope and increased size of this proposal, it is vital that our constituents, Congress and all other interested parties have the opportunity to fully understand all of these changes prior to providing the Department with feedback regarding the proposal,” according to the letter, dated May 6, 2015.
Among the 18 members of Congress that signed the letter, six are members of the House Financial Services Committee, which oversees issues relating to the economy, the banking system, housing, insurance, and securities and exchanges. Democratic congressmen Patrick Murphy (Fla.), Kyrsten Sinema (Ariz.), Ed Perlmutter (Colo.), Joyce Beatty (Ohio), William Lacy Clay (Mo.) and Jim Himes (Conn.) all signed the letter.
Wednesday’s letter comes on the heels of a letter sent Tuesday from nine senators led by Democrats Joe Manchin (W.Va.), Ben Cardin (Md.) and Jon Tester (Mont.), also seeking to push the public comment period to 120 days. The National Federation of Independent Business also sent a letter on Tuesday seeking a 45-day extension.