U.S. Department of Labor Proposes Additional Extension Of Transition Rule Period for Fiduciary Rule Exemptions

WASHINGTON, DC – The U.S. Department of Labor has announced a proposed 18-month extension from January 1, 2018, to July 1, 2019, of the special transition period for the Fiduciary Rule’s Best Interest Contract (BIC) Exemption and the Principal Transactions Exemption, and certain amendments to Prohibited Transaction Exemption 84-24.

The proposal follows a Request for Information published in July in which the Department asked for public input that could form the basis of new exemptions or changes to the rule and exemptions, and input regarding the advisability of extending the January 1, 2018, special transition period. The proposal was published for public comment in today’s edition of the Federal Register and is on the Employee Benefits Security Administration’s website, www.dol.gov/ebsa/. The Department will accept public comments on the proposal for 15 days following its publication.

The Department has also announced an enforcement policy in Field Assistance Bulletin (FAB) 2017-03 related to the arbitration provision in the BIC Exemption and Principal Transaction Exemption. Both exemptions include an arbitration provision that makes the exemptions unavailable if the financial institution's contract with a retirement investor includes a waiver or qualification of the retirement investor’s right to bring or participate in a class action or other representative action in court. In light of the position adopted by the Acting Solicitor General in its amicus brief in NLRB v. Murphy Oil USA, Inc., the U.S. Government is no longer defending these specific provisions as applied to arbitration agreements preventing investors from participating in class-action litigation. The FAB adopts an enforcement policy consistent with that position.