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PSCA Executive Reports

February 26, 2016

The Final DOL Fiduciary Rule Expected to be Issued Soon

The drama about the DOL revised fiduciary rule continues.  As previously reported, the DOL submitted its final version of that rule to the OMB’s Office for Information and Regulatory Review (“OIRA”) at the end of January, 2016.  The OIRA is required to review significant regulations before they can be issued in final form.  Under those procedures, the OIRA has up to 90 days to review a rule, and that clock now is ticking for this rule.  Most observers do not expect that review to take the full 90 days in this case.  In fact, many expect the final rule will be issued by the end of March (if true, the final rule and its expected impact on our industry will be discussed at a program dedicated to that topic at PSCA’s 69th Annual Conference this May in Nashville). The wait has begun!  

The timing for release of the final rule has been influenced by a desire to get this rule out in final form and effective before President Obama leaves office (and without being threatened by the right of Congress to challenge the regulation under the Congressional Review Act). That goal seems doable if the rule in out in final in the next month or so and made effective soon after that.

Opponents of the regulation are not giving up. Bills pending in both houses of Congress have been introduced to try to block the final rule from going into effect. These bills would require Congress to approve the DOL rule before it goes into effect—essentially reversing the application of the Congressional Review Act (where Congress can vote to stop a rule subject to presidential veto). If Congress then did not vote to approve the DOL rule, a vote that would seem likely if we got that far, the rule would be replaced by a new standard that would impose a best interest clause and would require the disclosure of conflicts, compensation, and fees. Since these bills, if passed, would face a likely presidential veto, the legislative approach faces daunting challenges and low expectations. Many people expect that frustration with the rule and the probable inability to stop it legislatively inevitably will lead to the filing of lawsuits challenging the substantive content of the DOL’s new rule and/or the process by which it was promulgated. Clearly, the final chapter of the fiduciary rule saga has yet to be written.

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