The Department of Labor (DOL) issued a release on Monday and announced that the full implementation of key provisions of the DOL fiduciary rule would be extended 18-months. To that end, the DOL’s announcement noted that the compliance date for the fiduciary rule’s special Transition Period for the Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24 (PTEs), will move to July 1, 2019, from the previous January 1, 2018 date.
The DOL stated in a separate News Release that was issued on Monday, that the extension is intended to give the DOL time “to consider public comments submitted pursuant to the Department’s July Request for Information, and the criteria set forth in the Presidential Memorandum of Feb. 3, 2017, including whether possible changes and alternatives to exemptions would be appropriate in light of the current comment record and potential input from, and action by, the Securities and Exchange Commission, state insurance commissioners and other regulators …”
Notwithstanding the extension for full implementation of the fiduciary rule, during the extended Transition Period, fiduciary advisors still have an obligation to give advice that adheres to impartial conduct standards. The impartial conduct standards, also referred to as the best-interest standard, took effect on June 9, and require fiduciary advisors to adhere to a best-interest standard when making investment recommendations, charge no more than reasonable compensation for their services, and refrain from making misleading statements.
While the DOL also announced on Monday the extension of the temporary enforcement policy contained in Field Assistance Bulletin 2017-02 , to cover the 18-month extension period, it should be noted that Department of Labor Secretary Alexander Acosta told lawmakers on November 15 that the best-interest standard under the Labor Department’s fiduciary rule is “in effect,” and that he’s ready to take action against “willful violations” of those rules.