Originally intended to go into effect on April 10, 2017, the DOL’s Conflicts of Interest final rule (referred to in the industry as the “Fiduciary Rule”) was delayed for 60 days while the department analyzed issues raised in President Trump’s February 3, 2017, memorandum. Despite the understanding that the rule would be implemented on June 9, 2017, there has still been some uncertainty. Would there be another delay? Would the rule be discarded altogether? Department of Labor Secretary Alexander Acosta helped eliminate some of that uncertainty by confirming that the Fiduciary Rule would go into effect on June 9, 2017.
Although the Fiduciary Rule will be implemented at this time, the DOL stated in a non-enforcement policy issued on May 22, 2017, that it will “not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions” during the implementation period. The transition phase will extend from June 9, 2017 through January 1, 2018.
During the transition period, the Fiduciary Duty rule will be applicable and the new exemptions, the BIC Exemption and the Principal Transactions Exemption, will be available. However, firms will only be subject to the impartial conduct standards requirements. Also, to help firms better understand the requirements effective during the transition period, the DOL issued these FAQs. In sum, here is what will go into effect on June 9th:
- The expanded definition of fiduciary investment advice;
- The Best Interest Contract Exemption (BICE) and the Principal Transactions Exemption will be available to fiduciaries; and
- Firms must comply with the Impartial Conduct Standards
- Therefore, adopt policies and procedures to comply with such standards
- CCLS can help! Contact us at email@example.com
The other BICE conditions do not have to be met prior to January 1, 2018.
The DOL is still actively evaluating the Fiduciary Rule per the presidential memorandum. Depending on its findings, there still may be future changes to the rule and exemptions. Additionally, the DOL plans to issue a Request for Information (RFI) to obtain additional public input on “specific ideas for possible new exemptions or regulatory changes based on recent public comments and market developments.”
The effective date is just around the corner, so take steps to implement appropriate procedures and controls to become compliant with the applicable requirements of the Fiduciary Rule.
For more information, contact CCLS at (619) 278-0020. Thank you.