The U.S. Department of Labor (DOL) must cease any further action to amend the definition of an investment advice fiduciary, according to U.S. Sen. Bill Cassidy (R-LA) and a Republican colleague.
Specifically, the lawmakers oppose the DOL’s August notice of proposed rulemaking (NPRM) that would amend the regulatory definition of the term fiduciary set forth in the Employee Retirement Income Security Act of 1974 (ERISA) to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of ERISA and section 4975(e)(3) of the Internal Revenue Code, according to the NPRM.
These ongoing “misguided efforts” by the DOL to enact the “Conflict of Interest in Investment Advice” rule have created confusion in the marketplace and unwarranted compliance expenses, wrote Sen. Cassidy and U.S. Rep. Virginia Foxx (R-NC) in an Aug. 31 letter sent to DOL Acting Secretary Julie Su.
“Over the last two years, the department has espoused at least three separate positions on what it means to be an investment advice fiduciary,” the lawmakers wrote. “By failing to articulate itself consistently, the department has created unnecessary instability for retirement plans, retirees, and savers.”
Introducing yet another new definition of investment advice fiduciary would harm savers, wrote Sen. Cassidy and Rep. Foxx, who serve as ranking member of the U.S. Senate Health, Education, Labor and Pensions Committee and chairwoman of the U.S. House Education and the Workforce Committee, respectively.
Sen. Cassidy and his colleague also detailed the DOL’s multiple conflicting positions on the fiduciary rule and how it has damaged American savers.
For instance, the DOL attempted to promulgate a definition of fiduciary under ERISA in 2016, an “ill-conceived and overreaching rule” that was vacated by the U.S. Court of Appeals for the Fifth Circuit.
“It should serve as a cautionary example,” Sen. Cassidy and his colleague wrote. “No American deserves to have his or her financial security threatened for political gain.”
Not only has the department’s shifting position “significantly harmed investors,” but it has also wasted taxpayer resources on legal challenges that could be dedicated to other priorities, according to their letter.