House Committee to Consider Blocking Implementation of DOL Final Fiduciary Rule
Policymakers are weighing in this morning on the final “Retirement Security Rule: Definition of an Investment Advice Fiduciary” and the related amended exemptions – all of which expand the types of advice that must meet a fiduciary standard.
The House Appropriations Committee is scheduled to vote today on the Labor, Health and Human Services, Education, Transportation, Housing and Urban Development, and Agriculture, Rural Development, and Food and Drug Administration Bills and Revised Subcommittee Allocations for fiscal year 2025. The voting session will start at 9 am ET.
The appropriations measure contains policy riders that would prevent the U.S. Department of Labor from spending money to administer, implement or enforce several regulations, including the DOL’s Retirement Security rule and three related rules involving prohibited transaction exemptions.
The Labor, HHS, Education, and Related Agencies Appropriations subcommittee approved the bill by voice vote on June 27.
The final rule and amended exemptions, which DOL released in April 2024 and are scheduled to take effect on Sept. 23, requires investment advice providers to give “prudent, loyal, honest advice free from overcharges.” Fiduciaries must adhere to high standards when they recommend investments and avoid recommendations that favor the investment advice providers’ interests – financial or otherwise – at the retirement savers’ expense. Under the final rule and amended exemptions, financial institutions overseeing investment advice providers must have policies and procedures to manage conflicts of interest and ensure providers follow these guidelines.
Advocacy groups, such as the Insured Retirement Institute support the policy riders and are urging the Committee to pass the measure.
Since the rule’s 2023 proposal and as previously reported by The DI Wire, advocates for fiduciary investment advice like the Institute for the Fiduciary Standard and the CFP Board came out in favor of the rule. Others such as the Investment Adviser Association were largely supportive.
However, advocacy groups such as IRI and the Financial Services Institute long expressed concern about the consequences of the rule and cited affiliated research. They also criticized the hastened regulatory process that transpired for DOL’s final rule.
The resolution provides for disapproval of the fiduciary rule under the Congressional Review Act, which allows Congress to potentially override federal agencies. If the Committee passes the bill this week, it will be eligible for consideration by the full House of Representatives.
In order to take effect and vacate the fiduciary rule, the resolution would have to pass the House and Senate before being signed by the president.
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