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Sen. Warren Blasts Proposed DOL Fiduciary Rule Delay

Senator Elizabeth Warren (D-Mass) sent a letter to Labor Secretary Alexander Acosta urging him not to delay the remaining provisions of the Department of Labor’s fiduciary rule for 18 months.

The DOL is seeking to extend the transition period in the best interest contract exemption and principal transaction exemption from January 2018 until July 1, 2019, and to delay the applicability date of certain amendments to the prohibited transaction exemption involving insurance agents and brokers for the same period. Last week, the DOL opened a 15-day comment period on the proposed delay.

Warren said that the “delay would endanger billions of dollars in Americans’ hard-earned retirement savings…and would ignore the preparation and positive outlook on the rule that many financial services and insurance companies have repeatedly expressed.”

In her letter, she cited a number of recent remarks made to investors by financial and insurance company CEOs, including the heads of LPL, Ameriprise, and Lincoln Financial, on their second quarter 2017 earnings calls.

“The comments…make clear four things: (1) companies are well-prepared for the rule’s implementation; (2) compliance with the rule is not overly burdensome; (3) the rule is consistent with their goals of putting their clients’ interests first; and (4) the Administration’s previous delays have caused uncertainty for the companies, and further delays would only exacerbate this uncertainty,” wrote Warren.

She said that the CEOs’ remarks “strike a remarkable contrast” with the comments made by financial services and insurance industry lobbyists who oppose the rule, and “directly contradict” the findings of a new study by the Securities Industry and Financial Markets Association.

Citing a new Morningstar report, Warren noted that in response to the new regulation, many financial services firm have already introduced new products and share classes that could increase returns, lower commissions, reduce conflicts of interest, and add transparency.

Warren also sent a copy of the letter to SEC chairman Jay Clayton, who recently issued a request for public comment on a range of questions, including standards of conduct for investment advisers and broker-dealers.

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