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DOL Issues Temporary Fiduciary Rule Enforcement Policy

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The Department of Labor has issued a temporary enforcement memorandum relating to the proposed 60-day fiduciary rule delay that was published in the Federal Register earlier this month.

The DOL issued the announcement due to concerns expressed by financial services institutions about the uncertainty surrounding the proposed rule delay and any potential gap periods that could occur if the delay goes into effect after the original April 10th fiduciary rule implementation date.

“Although the [DOL] believes it will issue a decision on [the 60-day delay] proposal before the April 10 applicability date…the [DOL] has determined that temporary enforcement relief is appropriate to protect against investor confusion and related marketplace disruptions attributable to uncertainty regarding the timing of the Department’s decision on whether to delay the applicability date of the fiduciary duty rule and related [prohibited transaction exemptions],” the announcement said.

If the DOL issues a 60-day delay after the April 10 implementation, “it will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the rule or the PTEs during the ‘gap’ period in which the rule becomes applicable before a delay is implemented.”

If the DOL decides not to issue a delay in the fiduciary rule, it will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date, failed to satisfy conditions of the rule “provided that the adviser or financial institution satisfies the applicable conditions of the rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a reasonable period after the publication of a decision not to delay the April 10 applicability date.”

In the future if other temporary relief is warranted, the Employee Benefits Security Administration will consider taking additional steps as necessary.

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