HR Alert

DOL Announces Temporary Enforcement Policy on Fiduciary Rule

Decision on Proposed Delay of Rule Expected Soon

The U.S. Department of Labor (DOL) has announced a temporary policy regarding its enforcement of the "Fiduciary Rule."

Background

On April 8, 2016, the DOL released a final rule ("Fiduciary Rule") expanding the number of persons that are subject to fiduciary standards when they provide retirement investment advice. The rule--which is set to become applicable on April 10, 2017--also includes exemptions that would allow advisers to continue to receive payments that could create conflicts of interest if certain conditions are met.

In response to a presidential memorandum, the DOL recently issued a proposed rule seeking to delay the applicability date of the Fiduciary Rule from April 10, 2017, to June 9, 2017.

Temporary Enforcement Policy
While the DOL has announced its intention to issue a decision on its proposed delay in advance of the April 10, 2017 applicability date, the agency has announced the following temporary policy regarding its enforcement of the Fiduciary Rule and its related exemptions:

  • In the event the DOL issues a final rule after April 10 implementing a delay, the agency will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the rule or the exemptions during the "gap" period in which the rule becomes applicable before a delay is implemented, including a failure to provide retirement investors with disclosures or other documents intended to comply with provisions of the rule or the related exemptions.
  • In the event the DOL decides not to issue a delay in the applicability date, the agency will not initiate an enforcement action because an adviser or financial institution failed to satisfy conditions of the rule or the related exemptions as of the April 10 applicability date, provided that the adviser or financial institution satisfies the applicable conditions of the rule or related exemptions (including sending out required disclosures or other documents to retirement investors) within a reasonable period after the publication of a decision not to delay the April 10 applicability date.
  • The DOL will treat the 30-day cure period for certain exemptions as available to financial institutions that did not provide the required disclosures as of the April 10 applicability date.

For more information, please read the temporary enforcement policy in its entirety.


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