60-day delay proposed, comments requested on president’s study.
The US Department of Labor (DOL) has proposed to delay the applicability date of the fiduciary rule (and related prohibited transaction exemptions) by 60 days and has also requested comments to help it complete a study that President Donald Trump ordered in the Presidential Memorandum.
The delay is not final yet, and the following steps need to be taken before it can be effective:
The time it takes to complete each step can vary, and we note that the April 10 applicability date is now less than 40 days away.
In addition to proposing a delay, the DOL has also requested comments on a wide range of issues related to the questions raised in the Presidential Memorandum and generally on questions of law and policy concerning the fiduciary rule and related exemptions.
The DOL’s questions are included in Part C of the preamble to the proposed delay and include such topics as how the fiduciary rule has impacted the markets for investment advice; the fiduciary rule’s impact on costs, availability of products and services; and firms’ strategies for, and costs associated with, compliance with the fiduciary rule.
The comment period for these issues ends April 17, 2017.
We strongly encourage firms to submit comment letters on the delay, as well as on the substantive questions the DOL has raised on the fiduciary rule itself. Given the short period for comments on the delay, we suggest that firms consider first commenting on the delay and then separately addressing substantive issues on the fiduciary rule. Firms may also want to consider ways to help the DOL complete its review of comments on the delay as quickly as possible.
We also emphasize that the proposed delay will not be effective until the DOL issues a final rule. Until then, April 10, 2017, is still the rule’s applicability date. As such, firms are advised to carefully consider their compliance strategies, business models, and communications with their representatives, employees, clients, and potential customers. Important here will be developing contingency plans to address the possibility of an April 10 or delayed effective date.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: