U.S. authorities have formally decided to delay enforcement of certain aspects of the fiduciary rule that was adopted by the U.S. Department of Labor (DOL) earlier this year.
The DOL on Monday announced an 18-month extension that will extend the transition period for certain provisions of the rule from Jan. 1, 2018, to July 1, 2019. The DOL had proposed an extension earlier this year following a directive from the White House to reassess the likely impact of the rule on the financial industry.
During the extended transition period, the DOL will consider the comments submitted in response to a request to reconsider certain aspects of the rule. By July 1, 2019, the department will decide whether to propose further changes to the rule.
The DOL said today that, during the transition, “fiduciary advisors have an obligation to give advice that adheres to ‘impartial conduct standards’. These fiduciary standards require advisers to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services, and refrain from making misleading statements.”
Also during the transition, the DOL will not pursue claims against fiduciaries working in good faith to comply with the fiduciary rule.
“Delaying the private enforcement mechanisms in the DOL’s ‘best interest’ fiduciary rule and sidelining other core provisions designed to eliminate conflicts of interest among advisers is a huge mistake. It renders the rule toothless and will wind up costing millions of Americans billions of dollars, denying them a safe and secure retirement,” says Stephen Hall, legal director and securities specialist for Better Markets, a non-profit advocacy group for Wall Street reform, in a statement.