ICI Calls DOL Fiduciary Proposal ''Unworkable''

The Investment Company Institute ("ICI") voiced concerns regarding the Department of Labor's rule proposal defining the term "fiduciary" under ERISA. The ICI called the proposed rule "unworkable."

In two more of what has been a series of comment letters, ICI raised numerous areas of concern including:

• the proposal would restrict the ability of investors to get the basic information they need to make informed investment choices – for example, by leaving key terms ambiguous and by revising current law to restrict the type of investment education that can be provided without triggering fiduciary status;
• the best interest contract ("BIC") exemption issued with the proposal contains a host of unrealistic conditions, including a signed written-contract requirement, waiver provisions that promote class-action lawsuits, and non-implementable and over-burdensome point-of-sale requirements;
• the proposal would be inordinately costly to implement; and
• the questions as to a "high-quality, low-cost" exemption are vague and the DOL makes no attempt to explain its view of criteria that make an investment "high quality."

ICI further argues that the rule proposal fails to balance investor protections with the desire to minimize market disruptions and preserve investor choice. ICI does, however, support a joint effort by the DOL and the SEC to work toward a harmonized fiduciary duty for all investors.