The possibility of a delay of DOL’s fiduciary rule as a result of the February 3, 2017 Presidential Memorandum faces a tight deadline according to the Washington D.C. based Groom Law Group. And legal challenges by annuity manufacturers and industry groups have so far failed. So, will the DOL’s rule set to become effective April 10, 2017 be delayed and, if so, for how long?
The potential rule that would cause a delay of DOL’s fiduciary rule is sitting at the Office of Management Budget (OMB) is “proposed” meaning that it is subject to notice and comment periods before the final rule can be published. So far the OMB has taken three meetings on the issue with five pending – more meetings could also be scheduled. Although the comment period could be as short as 14 days from the time the “proposed” rule is published, it still leaves little time before the April 10 deadline. The delay is expected to be 180 days though no one is certain.
If the “proposed” rule to delay generates significant comments as expected and the process takes as long as the DOL took with the original rule to consider these comments, then the deadline to publish is Friday February 24th according to Groom. Anything can happen but with the nomination of the new DOL Secretary pending, is it likely? Meanwhile federal courts in Kansas and Texas shot down attempts to delay or upend the rule in court. After the DOL’s initial fiduciary rule was scuttled because it did properly follow the proper administrative procedures, it took care with the current rule as noted by the Kansas judge who granted the DOL summary judgment noting that it did not violate the rule-making making process or exceed its authority.
The industry is taking a wait and see attitude. Though most broker dealers and RIAs are prepared to comply with the rule, they are still waiting to see if there is a delay.
