SIFMA Calls on DOL to Re-Propose Its Fiduciary Regulatory Package and Prohibited Transaction Exemptions

SIFMA urged the DOL to re-propose (i) its proposed fiduciary regulatory package and (ii) associated prohibited transaction exemptions, before adopting final rules.

In supplementary comments to the Employee Benefits Security Administration, SIFMA recommended, among other things, that the DOL proposal should:

• permit mandatory arbitration under the best interest contract exemption;
• clarify the rollover rule to exclude information regarding required distributions due to (i) the attainment of age 70 1/2 or (ii) beneficiary distribution rules in inherited IRAs;
• use FINRA Regulatory Notice 13-45 (Rollovers to Individual Retirement Accounts) as a model for the provision of information;
• use the FINRA best interest standard, rather than the DOL's proposed requirement that one give advice "without regard" to one's interest;
• work with the securities industry to create "reasonable" transition rules and effective dates for new broker-dealer systems that "will take years, not months to build"; and
• not underestimate the potential "disruption and confusion" from terminating "numerous" small IRA accounts.

SIFMA also provided suggested language changes to the fiduciary rule to provide clarity in an attached marked version. SIFMA reiterated its view that "in light of the many changes that even supporters have suggested and the many changes that are needed to make the rule work, the [DOL] should re-propose the rule and prohibited transaction exemptions before adopting them in final form."