On Tuesday, the Office of Management and Budget completed its review of the Department of Labor’s proposed rule delaying implementation of the agency’s fiduciary rule, and concluded that delaying the rule would be “economically significant.”
When the DOL originally submitted its proposal to the OMB for review, it indicated that a fiduciary rule delay was “not economically significant,” but the OMB disagreed. Following its review, the OMB changed the designation to “economically significant,” which involves additional hurdles for the DOL.
In an ever-complex game of regulatory tennis, the OMB hit the ball back to the DOL, requiring it to conduct an economic impact analysis of the rule’s delay. It is unclear how long the DOL’s analysis will take, and whether it will be completed before the rule’s rapidly approaching implementation date of April 10th – which is now just 40 days away.
The review notice on the OMB website also states that the proposed fiduciary rule delay is a “major” rule, a designation that requires a 60-day window between its finalization date and effective date.
This latest turn of events in the fiduciary rule saga provides little clarity on how this will play out, although industry insiders remain confident that a delay is imminent.
The fiduciary rule, which is intended to prevent conflicts of interest as it pertains to retirement investment advice, has its share of detractors. Opponents believe that the complex rule will prevent quality investment advice to the same lower income retirement savers the rule seeks to protect, while leaving financial firms susceptible to onerous class action lawsuits.
The fiduciary rule has survived four lawsuits from industry groups that argue it is too complex and out of the DOL’s jurisdiction to issue a regulation that would be better left to the Securities and Exchange Commission. Last week, the Chamber of Commerce, Financial Services Institute, and others submitted an appeal after a Texas judge ruled in favor of the DOL.