The U.S. House of Representatives approved legislation Tuesday evening that would delay – or possibly kill – the Department of Labor’s regulatory initiative to expand the definition of a fiduciary to encompass retirement plan advisors. The bill passed by a 254-166 margin, including 30 Democrats.
The measure, introduced last summer by Rep. Ann Wagner, R-Mo., would prohibit the DOL from proposing its regulation until 60 days after the Securities and Exchange Commission has finalized a similar rule in the works to raise standards for advisors who provide retail investment advice.
On Monday, the Obama administration threatened to veto the legislation, saying that it undermines the DOL’s efforts to protect workers and retirees from conflicted investment advice.
Supporters of Wagner’s bill say the SEC must go first to ensure coordination between the agencies and avoid duplicative costly fiduciary requirements that would ultimately limit investment advice for smaller investors. Opponents say that the bill would effectively kill the DOL rule if the SEC declines to propose its own regulation.
The legislation faces an uncertain future in the Democratic-controlled Senate. So far, there is no companion bill in the Senate. “We are working on some things behind the scenes with the Senate to move this through both chambers of Congress and to the president's desk,” Wagner told Investment News. “We're just in the middle of the game, and I want to see it all the way through.”
Speaking at the ASPPA Annual Conference Tuesday, Phyllis Borzi, head of the DOL's Employee Benefits Security Administration, indicated that there was a significant possibility the regulation could be at OMB by the end of the year -- meaning that the rule could be out by the second quarter of next year.
