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Congress Makes Another Move Against Fiduciary Rule

For the second time in a week, an important committee in the U.S. House of Representatives has approved legislation that could undermine the Labor Department’s proposed fiduciary rule.

The most recent step was a 26-12 vote by the House Ways and Means Committee on Feb. 3 to pass the Strengthening Access to Valuable Education and Retirement Support Act of 2015 (a.k.a. the SAVERS Act) (H.R. 4294), as amended. This time the effort was bipartisan — the legislation was introduced by Oversight Subcommittee Chairman Peter Roskam (R-Ill.) and Rep. Richard Neal (D-Mass.), the Ranking Member on the Tax Policy Subcommittee.

As did legislation approved Feb. 1 by the House Committee on Education and the Workforce, the SAVERS Act would require an affirmative vote by Congress before any final rule issued by the DOL goes into effect; if Congress fails to approve the DOL rule, a new fiduciary standard would take effect. Critics of that approach argue that the fiduciary standard contained in the legislation isn’t rigorous enough, and, as Ranking Member Sander Levin (D-Mich.) characterized it in his opening remarks, an “attempted end run around the rules making process” and a “harmful precedent that would bring agency rulemaking to a standstill.”

Roskam explained how the DOL rule would force Americans to break their personal relationships with their trusted financial advisors and instead rely on robo-advice and computer programs, saying, “They wouldn’t be able to have that advice. What does DOL say? Go to a website. Go to a website to get your advice. None of us [are] in favor of that.”

Bipartisan Twist

While the votes on legislation remain largely partisan (all 12 “no” votes in the Ways & Means vote were cast by Democrats, while just three voted in favor, along with all the Republicans), Rep. Neal, a Democrat who co-sponsored the bill, noted that the legislation was “motivated by the interests of the client” — i.e., the individual investor. “People need more advice, not less,” he said, noting that there was “no nefarious motive” behind the legislation.

Neal cited his record in support of Social Security and expanding coverage via his auto-IRA bill. He noted that his sponsorship of the legislation was evidence of his support for doing the right thing, regardless of party affiliation. Neal said that his action here would inspire at least one of his Republican colleagues to sign on to his auto-IRA bill.

During what amounted to a rebuttal of comments made suggesting that the committee should set aside any action until the final regulation, which is currently under review at the Office of Management and Budget, is presented, Roskam noted concerns that had been expressed by Democrats, including a letter from 96 Democrat members of Congress.

Nearly identical pieces of legislation were introduced just prior to the end of 2015.

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