Kent Mason opened his testimony at the public hearing for theDepartment of Labor’s proposed fiduciary rule saying the Departmenthas the opportunity to “do a lot of good.”

He then summarily said that no financial service institution hehas spoken with is willing to provide retirement services under therule as it is proposed.

Read all our coverage on the DOL proposed fiduciaryrule

Mason, an attorney with Davis and Harman LLP and an activeadvocate on behalf of brokerage industry interests throughout thedebate over Labor’s proposal, came to the hearing representing onlyhis own perspective.

Specifically, he said no institution he has spoken with iswilling to work under the proposal’s Best Interest ContractExemption.

That provision lays out specific requirements advisors wouldhave to adhere to if they were to receive commission compensationfrom investments recommended to IRA accounts and 401(k) plans.

Providers are already preparing to walk away from smalleraccounts, both in the retail and workplace space, rather thanstruggle to comply with the BICE, said Harmon, referencing what“dozens” of financial institutions are telling him.

Read: The DOL fiduciary rule: Reactions from 4industry associations

“In the fall of 2016, 20 million plus IRA account holders aregoing to be told they don’t have access to financial professional,”he said.

Instead of struggling to comply with the proposal, financialinstitutions are instead planning to work with customers onnon-retirement accounts.

One provider has told Mason they are already planning towithdraw from the small business market, he said.

“This thing needs radical surgery,” professed Mason.

The eight months within which the DOL is expecting industry tocomply with the rule is simply not a realistic expectation toMason, who said three years would be a more adequate transitionperiod.

Read: DOL fiduciary rule out by May2016

But many of his clients and industry sources say no matter whatchanges are made to the proposal, they are planning to shift out ofretirement and into non-retirement products.

The proposal’s so-called seller’s exemption, which says advisorsand providers to plans with more than 100 participants will not berequired to act as fiduciaries, effectively means that anyinquiries from smaller sponsors will trigger fiduciary status.

To Mason, that means that no one providing retirement servicescan interview with a small business.

Read: Fitch warns of potential disruptions from DOlfiduciary rule

Retirement providers will be “the only business in America thatcan’t market their services,” he said.

Two simplified rules are needed to correct the issue, saidMason. One is a simple contract saying advisors are acting inclients’ best interests, the other new compensation disclosurerequirements.

The 5,000 pages of comments the Department of Labor receivedsuggest to Mason that the chance of Labor getting the rule right inone final regulation is “infinitesimal.”

“You need to re-propose” a new rule, he insisted.

That suggestion, along with most of Mason’s testimony, sparked acontentious question-and-answer session, all of which was focusedon Mason’s testimony and not that of the two other witnesses on thepanel.

“We ultimately are very interested in figuring out how to fixoperational problems” in the proposal, said Timothy Hauser, deputy assistant for program operations atDOL and head of the four-person panel directing the hearing.

“But to prejudge and say we need a new notice (rule makingperiod) and comment now is premature,” he said.

“When I hear that nobody in the industry is going to be able tocomply with the rule, I have to wonder what they are being told,”he added.

Hauser then brought attention to language in a Greenwald and Associates survey of financial institutions thatwas commissioned by Davis and Harman, Mason’s employer.

Hauser quoted language in the survey, which said the DOL’s ruleis expected “to prohibit retirement plan providers and the advisorswho sell retirement plans from assisting employers in the selectionand monitoring of funds” in retirement plans.

“Does that not seem a little slanted,” asked Hauser,incredulously. “Can you point to language in the proposal that saysthat?”

Mason said the description in the Greenwald survey of the DOL’srule was “100 percent correct.”

“We quite plainly are not trying to prohibit advice,” saidHauser.

The two also wrestled with the question of “level fees,” whichMason says the proposal insists via the Best Interest ContractExemption.

BICE is too unclear to allow for more expensive or proprietaryproducts to be recommended, said Mason.

The BICE provision clearly “does not mandate level feecompensation,” countered Hauser.

Mason insisted that contract, as proposed, poses far too muchliability in terms of states class action laws. That alone willforce providers from the market.

“Just the possibility of class action claims is enough to makesome walk away,” asked Hauser.

“For some, yes,” answered Mason. “Not an insignificantproportion.”

“So they say they are willing to tell their customers they areadhering to a best interest standard, but not if it is going to beenforceable by the customer?” asked Hauser, again incredulous.

“Some are saying that,” answered Mason.

Mason gave a specific example of how the rule’s educationcarveout remains too ambiguous for sponsors to comply with.

He offered an example of a participant seeking help from a humanresources staff member with their plan. Mason claimed that instancewould trigger fiduciary requirements on the HR employee andsponsor.

Hauser and the three other DOL representatives quickly jumped into correct Mason.

“No it would not. There is a specific provision that carves thatout,” insisted Hauser.

“That is wrong,” said Mason, unwilling to budge. “I am rightabout this.”