Rumors circulating within the financial services industry thatthe Department of Labor is considering delaying the fiduciary rule’s effective date are largelyunsubstantiated, according to Brad Campbell, an attorney in theEmployee Benefits and Executive Compensation Practice Group withDrinker Biddle.

|

Related: More DOL fiduciary rule coverage

|

“DOL has said nothing officially, and I’ve heard nothingunofficially about whether it would decide to extend the deadline,”said Campbell, addressing an audience of advisors and industrystakeholders in a recent webinar he co-hosted with Fred Reish,chair of Drinker Biddle’s Financial Services ERISA team.

|

“I can’t imagine the DOL would have an incentive to makethat decision yet,” he added.

|

Related: Thrivent suit pits ERISA against FederalArbitration Act

|

Campbell said the genesis of those rumors stems from requestsindustry has made to DOL to delay the rule’s implementation, and notfrom the agency’s receptivity to those requests.

|

“Industry is saying we’ve been working in good faith for sevenmonths and spending untold millions to comply with the rule, butthat this is a tough road to do in 12 months,” explainedCampbell.

|

Moreover, guidance the agency has acknowledged industry willneed to help interpret the rule has yet to come, making the April10, 2017 implementation deadline even more burdensome.

|

Campbell said efforts in Congress to defund DOL’s ability toimplement the rule before the end of President Obama’s last termare likely to fail.

|

|

While there is the possibility that Republican lawmakers willtry to attach an anti-fiduciary rule rider to this year’s omnibusspending bill, such a provision will likely result in a veto fromthe President, Campbell said.

|

The lawsuits in four circuits seeking injunctions against therule are more of a “wild card,” he said. “A victory in any of thosecases would be a tremendously significant development.”

|

Oral arguments have been heard in two cases so far. The U.S.District Court for the District of Columbia is expected to issue aruling in the National Association for Fixed Annuities’ lawsuitagainst DOL any day.

|

Campbell and Reish said the outcome of the Presidential electionhas the potential to impact the implementation date of the rule,and perhaps its entire fate.

|

“We assume a Trump administration would be opposed, at least inpart, to the rule, and probably be receptive to slowing downimplementation of the rule, but the campaign has made no officialstatements on the issue,” said Campbell.

|

Throughout the campaign season, Donald Trump has made repeatedpledges to roll back President Obama’s executive orders and repealthe Affordable Care Act.

|

In an August speech to the Detroit Economic Club, he promised toissue a temporary moratorium on all new federal agency regulations,saying the nearly 400 new regulations created under the Obamaadministration each cost the economy “$100 million or more.”

|

The implication of a victory for Sec. Clinton would be lessclear, said Campbell

|

Sec. Clinton has formally endorsed the rule, soit is likely to continue to move forward in the event of hervictory.

|

But what Campbell says is less certain is whether heradministration “will be somewhat friendly to modifying questionsand guidance softening, or would they continue in a similar orperhaps more aggressive fashion than the Obama administration—thatis a little bit more up in the air.”

|

It is possible a Clinton administration would be sympathetic toindustry’s concerns over the implementation date, Campbellsuggested, citing President Bill Clinton’s administration, which hesaid was receptive to the financial services industry’sinterests.

|

But Campbell also noted that this election season, Sec. Clintonhas welcomed input from Sen. Bernie Sanders, I-VT, and her opponentin the Democratic primary, and Sen. Elizabeth Warren, D-MA, bothstrong supporters of increased regulation over the financialservices industry.

|

“Would a Clinton administration be friendly to modifying some ofthe rule--we don’t know,” said Campbell. “Clearly they are for therule, but how would that manifest in dealing with the rule’simplementation questions is less certain.”

|

No matter the outcome of litigation against the rule, or thePresidential election, both attorneys advised against await-and-see strategy, and said by and large, industry is moving tocomply with the April 10, 2017 deadline.

|

“What I’m seeing from my clients, they are looking at the April10 deadline and saying if we hold off and wait to see what happensand the courts don’t issue the injunctions, they are dead—theywon’t be able to get into compliance in time,” said Reish.

|

“We really don’t have a choice on compliance,” added Campbell.“The deadline is so short and the hill to climb so high that peoplehave to keep going full speed ahead.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.