According to the recently released fall 2013 Statement of Regulatory Priorities, the Department of Labor intends to reissue its definition of fiduciary regulation in August 2014.
Originally issued in October 2010, the proposed regulation was withdrawn in September 2011 in response to requests from the public, including members of Congress, that the agency allow an opportunity for more input on the rule.
Between the date the proposed regulation was originally issued and today, the title (and focus) has changed from “Definition of the Term ‘Fiduciary’” to “Conflict of Interest Rule – Investment Advice.” In addition, the description of the regulation has been changed to focus on the alleged “conflict of interest” of investment advisors that the DOL believes needs to be remedied. According to the DOL:
This rulemaking would reduce harmful conflicts of interest by amending the regulatory definition of the term "fiduciary" set forth at 29 CFR 2510.3-21(c) to more broadly define as fiduciaries employee benefits plans and individual retirement accounts (IRAs) those persons who render investment advice to plans and IRAs for a fee within the meaning of section 3(21) of the Employee Retirement Income Security Act (ERISA) and section 4975(e)(3) of the Internal Revenue Code. The amendment would take into account current practices of investment advisers and the expectations of plan officials and participants and IRAs owners who receive investment advice, as well as changes that have occurred in the investment marketplace and in the ways advisers are compensated that frequently subject advisers to harmful conflicts of interest.
There is no guarantee that the reproposed regulation will be issued in August 2014. After all, it was supposed to have been released in October 2013, but that date was pushed back by EBSA chief Phyllis Borzi in September.
ASPPA and NAPA will continue to monitor the progress of the DOL on this very important issue and will update you as we receive new information.
Ronald J. Triche, Esq., APM, is ASPPA’s Assistant General Counsel and Director of Government Affairs.
