The Department of Labor is seeking the public’s feedback on what parts of its fiduciary rule should be revised, if any, and whether the January 1, 2018, applicability date should be delayed.
The department issued a request for information Thursday evening, asking for data and information that may be used to revise the rule and its exemptions. The public will have 15 days to comment on a possible delay of the January 1 applicability date, when the rule will be fully implemented.
The first two prongs of the rule went into effect June 9, one expanding the definition of who is a fiduciary and another establishing impartial conduct standards.
President Donald Trump signed an executive order in February ordering the DOL to undertake an economic and legal review of the fiduciary rule. That prompted the department to delay the April 10 implementation date to complete its analysis.
Labor Secretary Alexander Acosta announced in a Wall Street Journal op-ed May 22 that the department wouldn’t further delay the June 9 applicability date. But he didn’t rule out further review of the rule.
The public will have 30 days from the time the department publishes the RFI in the Federal Register to comment on all other issues related to the rule’s review.
Currently enforcement of the rule is still up in the air. In a field assistance bulletin, the DOL explained, “[D]uring the phased implementation period ... the department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.”
In its request, the department noted that there are some recent innovations that could help the industry comply with the rule, citing the introduction of “clean shares” by mutual fund companies as one example. Clean shares would strip away all the indirect payments, including 12b-1 fees. But commenters say fund companies need more time to develop clean shares and that the January 1 deadline does not provide that.
“The Department is particularly interested in public input on whether it would be appropriate to adopt an additional, more streamlined exemption or other rule change for advisers committed to taking new approaches like those outlined above based on the potential for reducing conflicts of interest and increasing transparency,” the request said. “If commenters believe more time would be necessary to build the necessary distribution and compliance structures for such innovations, the Department is interested in information related to the amount of time expected to be required.”
