Labor Secretary Alexander Acosta sat before a House Appropriations subcommittee during a budget hearing on Wednesday and suggested that the previous administration may not have considered the concerns raised during the rulemaking process for the Department of Labor’s fiduciary rule.
Acosta also disclosed that the DOL posted a request for information to the Office of Management and Budget website relating to the fiduciary rule and its prohibited transaction exemptions. The request for information, which has not yet been published, is the first step in the review that was directed by President Trump earlier this year.
“Just this morning on the OMB website a request for information went public asking industry and consumers a number of questions about the rule, about how the rule is being implemented, about the impacts the rule has, and that is the first step in this administration’s review of that rule,” said Secretary Acosta. “We need that information and we need that data in order to decide how to proceed.”
Rep. Stephen Womack (R-AR) questioned Secretary Acosta on concerns surrounding the fiduciary rule, including inhibiting job growth, job creation, and the impacts on the younger generation that are in the early stages of saving for their retirement.
“Is it not obvious that this is going to limit their options,” said Rep. Womack. “Does it have some far-reaching effects that would be counterproductive particularly to the younger generation’s saving opportunities?”
Acosta carefully remarked that those same concerns were voiced during the Obama administration.
“Those concerns were voiced in the original rulemaking process, and the prior administration decided that those concerns were outweighed by what the prior administration wanted to do,” said Acosta.
He added, “At this point, the administrative procedures act and administrative law prohibits me from pre-judging the rule, so I will acknowledge those concerns, but we need the data to substantiate those concerns because the decisions have to be based on the record or else it becomes pre-judgement. Those concerns certainly surfaced the first time around and unfortunately they were not heard – and that’s what happens.”
“I hope they are heard in the next review,” said Rep. Womack.
The fiduciary rule will become applicable on June 9th while the DOL seeks additional public comment on the regulation that intends to eliminate conflicts of interest as it pertains to retirement investment advice. According to the DOL fiduciary rule, all who provide retirement investment advice to plans, plan fiduciaries and IRAs are required to abide by a “fiduciary” standard.
Last week, SEC chairman Jay Clayton issued a request for public comment on standards of conduct for investment advisers and broker-dealers that provide investment advice to retail investors.