The Department of Labor (DOL) issued a
final rule delaying the applicability date defining who is a fiduciary and related prohibited transaction exemptions for 60 days.
The rule also extends for 60 days the applicability dates of the Best Interest Contract Exemption and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs. It requires that fiduciaries relying on these exemptions for covered transactions adhere only to the Impartial Conduct Standards (including the “best interest” standard), as conditions of the exemptions during the transition period from June 9, 2017, through January 1, 2018.
The fiduciary definition in the rule published on April 8, 2016, and Impartial Conduct Standards in these exemptions, are applicable on June 9, 2017, while compliance with the remaining conditions in these exemptions, such as requirements to make specific written disclosures and representations of fiduciary compliance in communications with investors, is not required until January 1, 2018.
The rule also delays the applicability of amendments to Prohibited Transaction Exemption 84-24 until January 1, 2018, other than the Impartial Conduct Standards, which will become applicable on June 9, 2017. It also extends for 60 days the applicability dates of amendments to other previously granted exemptions.
The final rule is effective April 10, 2017. The end of the effective period for the temporarily applicable provisions of 29 CFR 2510.3-21(j) is extended from April 10, 2017, to June 9, 2017.
(Update April 5, 2017)
The U.S. Department of Labor (DOL)
proposes to delay the rule defining who is a fiduciary and related prohibited transaction exemptions (PTEs) for 60 days. The Conflict of Interest rule, which would require all financial advisers to act in the best interests of their clients, has an initial applicability date of April 10, 2017.
On February 3, 2017, President Trump directed the DOL to examine whether the final fiduciary rule may adversely affect the ability of Americans to gain access to retirement information and financial advice, and to prepare an updated economic and legal analysis concerning the likely impact of the final rule as part of that examination. The extension would make it possible for the DOL to take additional steps (such as completing its examination, implementing any necessary additional extension(s), and proposing and implementing a revocation or revision of the rule) without the rule becoming applicable beforehand. The intention is to spare advisers and investors the risk and expenses of facing two major regulatory changes.
The proposed 60-day delay would be effective on the date of publication of a final rule in the Federal Register.
Comments on the proposed delay are due March 17, 2017.
Comments on the Presidential Memorandum and law and policy concerning the Conflict of Interest final rule and PTEs are due April 17, 2017.
(Posted March 1, 2017)