The Office of Management and Budget found the controversial Department of Labor's fiduciary rule to be “economically significant” in a review completed Monday, a finding that puts a rule delay in doubt.
The OMB reviewed a DOL request to delay the fiduciary rule. The “economically significant” finding is a win for pro-rule consumer groups, sources say. It means a longer comment period, likely 60 days, and potentially more analysis work for the DOL to defend the rule.
The rule is slated to begin taking effect April 10. Any comment period longer than 15 days means the DOL will not be able to push back that “applicability date.”
With the OMB review finished, the delay request is back in the DOL's court.
The change in finding from not economically significant to economically significant “will require a much more robust economic analysis,” said Erin M. Sweeney, a lawyer with Miller & Chevalier in Washington, D.C.
“The DOL will need to decide whether to proceed with a 180-day delay or to dial back the delay in an effort to obtain a characterization as not economically significant.”
The DOL spokeswoman assigned to the fiduciary issue did not respond to phone or email messages for comment.
In his first action on the DOL rule, President Donald J. Trump directed the department to seek a delay to assess whether the rule harms consumers.
OMB received the delay request Feb. 9. It has since been meeting with primarily pro-rule groups such as AARP and the Consumer Federation of America. Rumors surfaced last week that the OMB was concerned that pro-rule groups would sue if its review was in any way flawed.
Barbara Roper, director of investor protection for the CFA, deferred comment until the DOL decides its next step.
A DOL delay request can take two forms, a proposed rule or an interim final rule. The significant difference is the timing of required public comment.
A proposed rule requires public comment before it can be published, while an interim final rule can be published first, with comment taken afterwards.
Extending the applicability date will give the Trump administration DOL more time to change the rule to its liking. An Obama administration initiative, the fiduciary rule extends a best-interest standard of care to anyone investing or doing financial planning with retirement dollars.
Industry opponents say the DOL rule comes with so many added costs that advisors will not be able to service the small savers who need advice the most.