Rumors circulating within the financial services industry that the Department of Labor is considering delaying the fiduciary rule’s effective date are largely unsubstantiated, according to Brad Campbell, an attorney in the Employee Benefits and Executive Compensation Practice Group with Drinker Biddle.

“DOL has said nothing officially, and I’ve heard nothing unofficially about whether it would decide to extend the deadline,” said Campbell, addressing an audience of advisors and industry stakeholders 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 make that decision yet,” he added.

Campbell said the genesis of those rumors stems from requests industry has made to DOL to delay the rule’s implementation, and not from the agency’s receptivity to those requests.

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

Moreover, guidance the agency has acknowledged industry will need to help interpret the rule has yet to come, making the April 10, 2017 implementation deadline even more burdensome.

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

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

The lawsuits in four circuits seeking injunctions against the rule are more of a “wild card,” he said. “A victory in any of those cases 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 a ruling in the National Association for Fixed Annuities’ lawsuit against DOL any day.

Campbell and Reish said the outcome of the Presidential election has 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 in part, to the rule, and probably be receptive to slowing down implementation of the rule, but the campaign has made no official statements on the issue,” said Campbell.

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

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

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

Sec. Clinton has formally endorsed the rule, so it is likely to continue to move forward in the event of her victory.

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

It is possible a Clinton administration would be sympathetic to industry’s concerns over the implementation date, Campbell suggested, citing President Bill Clinton’s administration, which he said was receptive to the financial services industry’s interests.

But Campbell also noted that this election season, Sec. Clinton has welcomed input from Sen. Bernie Sanders, I-VT, and her opponent in the Democratic primary, and Sen. Elizabeth Warren, D-MA, both strong supporters of increased regulation over the financial services industry.

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

No matter the outcome of litigation against the rule, or the Presidential election, both attorneys advised against a wait-and-see strategy, and said by and large, industry is moving to comply with the April 10, 2017 deadline.

“What I’m seeing from my clients, they are looking at the April 10 deadline and saying if we hold off and wait to see what happens and the courts don’t issue the injunctions, they are dead—they won’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 people have to keep going full speed ahead.”

Instant Insights /

ERISA attorneys dismiss rumors of DOL fiduciary rule delay

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