Sheri A. Creger, CPFA Ι August 11, 2017
On August 9th, 2017, the Department of Labor submitted a proposal to the Office of Management and Budget (OMB) to delay the January 1, 2018, applicability date for certain exemptions to the fiduciary rule until July 1, 2019. The 18 month delay would apply to phase two which includes the best interest contract exemption (BICE), principal transactions exemption, and the prohibited transaction exemption 84-24 (or PTE 84-24 which covers compensation paid in the insurance and securities brokerage context.)
Currently, these exemptions (BICE, Principal Transactions, and PTE 84-24) are in effect but generally require only compliance with the “impartial conduct standards” during the Transition Period, which began on June 9, 2017.
The first phase of the fiduciary rule which went into effect June 9, expanded the definition of who is a fiduciary as well as established the impartial-conduct standards. But full compliance with the new rule was not required until January 1, 2018. Without the latest delay, the BICE will be required to sell fixed, indexed and variable annuities beginning January 1, 2018. Opponents of the rule are concerned with the phase two rules that would establish a class-action right to sue.
The DOL’s intention to delay the full implementation date of the fiduciary rule was revealed in a court filing in the Minnesota case brought against the DOL by Thrivent Financial. The DOL’s filing didn’t provide details about the delay, but it did say that the full proposal was expected to be published in the Federal Register by the OMB on August 10, 2017, which, barring any complications, makes the delay official.