Joint resolution to block Department of Labor from redefining “fiduciary” approved by House
The House of Representatives approved a resolution on Thursday to prevent a Department of Labor (DOL) rule to expand the definition of “fiduciary” from taking effect.
In an attempt to avoid conflicts of interests in individuals who provide investment advice, the rule would redefine “fiduciary” under the Employee Retirement Income Security Act (ERISA) of 1974 and the Internal Revenue Code.
Authored by U.S. Reps. Phil Roe (R-TN), Ann Wagner (R-MO), and Charles Boustany (R-LA), H.J.Res. 88 evokes special congressional procedures established under the Congressional Review Act of 1996 for disapproving certain regulatory actions of federal agencies.
Boustany said that the rule would make it so costly to use a retirement financial advisor that low- and medium-income families would have been shut out.
“This proposed regulation could force some investors into fee-based account arrangements, which could actually be to their detriment,” Boustany said. “Just as in most things in life, a one-size-fits-all solution would most certainly not be best for all. Ultimately, this will stifle individual choice and empower government bureaucrats to make decisions on behalf of those saving for retirement, instead of professional retirement advisors with the knowledge and qualifications to provide advice for their clients.”
U.S. Rep. French Hill (R-AK) said that the finalized rule would lead to a less diversity of choice and limited access to professional planning and guidance for low balance savers who need it most.
“I have long believed that the Securities and Exchange Commission —the governing agency with the most expertise — should be taking the lead,” Hill said. “The administration should have insisted on it. Instead, we are left with a thousand-plus page rule that creates a confusing, bifurcated set of standards for investment advisors, unnecessarily burdening those trying to save for retirement. Americans need more access to affordable retirement options, not less.”
Passage of a joint resolution disapproving a rule means the rule cannot take effect and the agency cannot reissue the rule or a substantially similar rule without authority under a newly enacted law.
“Hard working American families have the right to get affordable access to financial advice to help them make complicated life planning decisions,” U.S. Rep. Ken Calvert (R-CA) said. “This is yet another example of the Obama administration putting Washington bureaucrats between Americans looking for help and the professionals who provide specialized services.”
U.S. Rep. Sean Duffy (R-WI) took to the House floor to question how anybody could comply with the DOL’s new “1,000-page rule.”
“The Department of Labor doesn’t understand this rule,” Duffy said. “Nobody across the aisle understands this rule. And so when a small town investment advisor breaks this thousand-page rule, in comes the trial bar and sues.”
Under the rule, Duffy said, millionaires and billionaires would still have access to personalized financial advice, but low- and middle-income savers would be told that their needs could no longer be serviced.