The future of the new Department of Labor’s fiduciary rule is very questionable after the head of the Senate Homeland Security and Governmental Affairs Committee recently said implementation should be halted. According to a recent LifeHealthPro article, Sen. Ron Johnson, R.-Wis., chairman of the committee, told Labor Secretary Thomas Perez that the “burdensome” fiduciary rule will likely be “undone” by the incoming Trump administration.
“I urge the Labor Department to cease implementation of the regulation immediately to spare low- and middle-income Americans, financial advisors and small businesses from the unnecessary and avoidable burdens that will drive up the costs of services and decrease access,” Johnson said. “I hope the Labor Department will acknowledge the reality of the situation and avoid imposing unnecessary costs and burdens in further implementation of regulation that will very likely be rescinded.”
Following Johnson’s letter, Phyllis Borzi, assistant secretary of Labor for DOL’s Employee Benefits Security Administration and strong defender of the rule, refused to admit that the incoming administration might do away with it.
“We know that once these market forces have been unleashed, we’re not really going back to the old days,” stated Borzi. “I’m not going to speculate on what a future administration would do, but I will say this: The customer-first principle that’s embodied in this rule has already taken hold in the marketplace, and companies are not going back; they are going to continue to move in that direction. The speed at which they move may vary depending on what happens, but I’m not going to conclude that this rule is going away.”
The DOL’s fiduciary rule was passed after a six-year uphill battle. Borzi acknowledged that although they were met with much opposition, they felt strongly that the rule was the right thing to do. She also admitted that there were unintended consequences as a result of the rule, and that there are changes that could be made to improve it. But because there was a lot of hard work put into passing it, Borzi’s tenacity in seeing in through is understandable.
Written by Rachel Summit