Foes of the DOL’s proposed fiduciary rule suffered a setback last week when the House of Representatives passed an omnibus spending bill omitting any measures that would have stalled, hindered, or killed the proposal. On the table during budget negotiations were riders and amendments to the bill that would have defunded the proposal, required a new comment period, or proposed an alternative standard altogether. The new standard’s proponents, including the DOL, SEC, and the Obama administration say that the rule proposal which would require brokers to put their clients' interests ahead of their own in 401(k) and individual retirement accounts is vital to protecting workers saving for retirement from high-fee products that erode their savings.
During budget negotiations, opponents of the proposed rule and their allies in the House offered various riders and legislative amendments to the bill a tactics to delay or derail the proposal. Representatives Phil Roe, (R-TN), Richard Neal, (D-MA), Peter Roskam, (R-IL), and Michelle Lujan Grisham, (D-NM) offered legislation that would replace the DOL’s proposed fiduciary standard with a different standard that would not force IRA providers into a fee-based model, as the DOL proposal would do if adopted. Opponents of the DOL standard assert that forcing IRA providers to put the interests of their clients ahead of their own, thus pushing them into a fee-based compensation structure, could impair low and middle-income investors’ access to financial advice.
In addition to offering an alternative standard, foes of the DOL proposal also offered amendments that would have opened yet another comment period for the proposal, delaying its adoption further and buying time for industry and legislative opponents to find another way to scuttle the proposal.
Finally, legislative opponents of the proposal offered a series of amendments to the budget bill that would have prohibited the DOL from spending any funds on implementing the rule.
Ultimately, all of this legislative gamesmanship failed, and the spending bill passed without language imposing barriers on the DOL’s ability to move forward with finalizing the new fiduciary standard, something it seems poised to do in 2016.
According to Barbara Roper, director of investor protection at the Consumer Federation of America, a fierce proponent of the new standard, “Financial firms have mounted one of the most aggressive lobbying campaigns in recent memory to defeat a rule that would require them to put their customers' interests first when providing retirement investment advice. . . We are enormously grateful that Congress chose to stand up to the special interests and stand with workers and retirees on this issue of immense importance to their retirement security.”