Representatives Urge DOL to Rethink Fiduciary Proposal

At a U.S. House Education and Workforce Committee hearing, U.S. House Representatives John Kline (R-MN) and Phil Roe (R-TN) urged DOL Secretary Thomas Perez to replace the DOL's proposed approach of expanding the scope of those persons classified as fiduciaries, with the "bipartisan" Affordable Retirement Advice Protection ("ARAP") Act (H.R. 4293) and its companion, the Strengthening Access to Valuable Education and Retirement Support Act ("SAVERS Act") (H.R. 4294).

In his statement regarding the proposed rule, Representative Kline called on the DOL to abandon a "flawed partisan proposal":

The department's my-way-or-the-highway approach will not deliver the lasting, positive change working families and job creators need to move this country forward. The only way to do that is for the administration to work with members of Congress – Democrats and Republicans.

Representative Roe reiterated that the ARAP and SAVERS Acts would make the DOL's "stated goal of a 'best interest' standard a reality without prohibiting advice," in contrast to the DOL's own proposal, which would "make it harder for working families to save and plan for retirement."

The American Council of Life Insurers ("ACLI") expressed support for the proposed ARAP and SAVERS Acts. It also included a copy of its statement from December 22, 2015, in which the ACLI indicated that the bipartisan legislation would provide a "meaningful, yet reasonable, path forward for the Administration."

In defense of the DOL-proposed rule, which he called a "conflict of interest" rule, Secretary Perez asserted that the proposal would clarify "the scope of the definition of a fiduciary, so that it clearly includes brokers and others giving investment advice to employees in 401(k) plans, IRA owners, other retirement savers and certain plan sponsors." Secretary Perez also stressed that the final rule and exemptions would reflect feedback from a "broad range of stakeholders" that included the "industry, consumer advocates, Congress, retirement groups, academia, other regulatory agencies and the American people." He noted that the DOL "expects to issue a final rule and related exemptions soon."