Wagner Bill to Kill DOL Fiduciary Rule Passes House Committee
Rep. Ann Wagner’s (R-MO) recently introduced bill to repeal the Department of Labor’s fiduciary rule has passed the House Financial Services Committee in a 34-36 party-line vote and now moves to the House floor.
The Protecting Advice for Small Savers (PASS) Act Of 2017 (H.R. 3857) replaces the DOL fiduciary rule with a best interest standard of conduct for brokers and gives fiduciary rulemaking jurisdiction to the Securities and Exchange Commission. The bill would also prevent the Treasury Department and the DOL from implementing fiduciary regulations on broker-dealers under The Employee Retirement Income Security Act of 1974.
The PASS Act will require broker-dealers to disclose compensation they receive and any conflict of interest that exists, and will preempt state laws to avoid a patchwork of standards.
Last week, Securities and Exchange Commission chairman Jay Clayton sat before the House Financial Services Committee and informed lawmakers that the agency is drafting its own fiduciary rule proposal, with “themes” similar to Wagner’s bill.
“A lot of the themes you outlined [in the PASS Act] are the themes that I have,” Clayton told Rep. Wagner during the October 4th hearing. He then noted that any joint-rulemaking efforts conducted with the DOL must adhere to four principles: choice, clarity, consistency, and coordination.
Industry organizations that support the PASS Act include the U.S. Chamber of Commerce, Financial Services Roundtable, Securities Industry and Financial Markets Association, Financial Services Institute, National Association of Insurance and Financial Advisors, American Counsel of Life Insurers, and the Investment Company Institute.
In addition to the PASS Act, the Financial Services Committee passed the Fair Investment Opportunities for Professional Experts Act (H.R. 1585), which expands the definition of accredited investor to include state-licensed financial services professionals and those with professional knowledge relating to a particular investment. The panel also passed the Senior Safe Act of 2017 (H.R. 3758) which gives legal protection to advisors who disclose financial exploitation of senior citizens.
The DOL fiduciary rule, which is currently under review as directed by the President, attempts to reduce conflicts of interest in retirement investment advice and redefines who is considered an investment advice fiduciary under the Employee Retirement Income Security Act of 1974. Full implementation of the rule was recently delayed for 18-months until July 1, 2019.
