InvestmentNews outlined the Department of Labor’s (DOL) announcement that it would extend its nonenforcement policy for its fiduciary rule through Jan. 31. Benefits and executive compensation partner Fred Reish addressed the significance of the delay for broker-dealers, investment advisers, insurance companies, banks and trust companies.
“First, by extending the policy into next year, it means that financial institutions will not have to do the annual retrospective review for 2021,” said Reish. “Second, it will allow financial institutions to send out their 2020-02 disclosures with their Dec. 31 statements. Both of those are very practical and helpful.”
The delay in the disclosures to retirement customers — which require advisers to show the reasons they recommended rollovers and how such rollovers are in the clients’ best interests — was necessary for practical reasons, Reish explained. “Financial institutions were having difficulty developing the information and processes for doing that.”
What firms should consider is that the delay only applies to DOL and IRS enforcement, Reish noted, and not to private litigation that could be brought by retirement plan participants, for instance.
Further, the impartial conduct standards necessary for the exemption, which include a best-interest standard, should not be ignored. “That requirement is not extended,” Reish added.