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DOL Extends Transition Period for Fiduciary Rule
Friday, December 8, 2017 7:00 AM

This week, the U.S. Department of Labor announced an 18-month extension from Jan. 1, 2018, to July 1, 2019, of the special Transition Period for the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24. 

According to the DOL press release, “the extension gives the Department the time necessary 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.”

The fiduciary rule’s amended definition of fiduciary investment advice went into effect on June 9, 2017, and the rule’s exemptions became available to fiduciary advisers. However, for a transition period, now extending to July 1, 2019 (instead of January 1, 2018), fewer conditions will apply to financial institutions and advisers that want to rely upon the exemptions.

During the extended transition period, financial institutions and advisers must comply with the “impartial conduct standards” which are consumer protection standards that ensure that advisers adhere to fiduciary norms and basic standards of fair dealing. The standards specifically require advisers and financial institutions to “give prudent advice that is in retirement investors’ best interest, charge no more than reasonable compensation, and avoid misleading statements.”

The DOL also announced an extension of its temporary enforcement policy to cover the 18-month extension period. From, June 9, 2017, to July 1, 2019, the agency will not pursue claims against fiduciaries “working diligently and in good faith” to comply with the transition rules.

Source:  CUNA Compliance Blog