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House Committee Passes Bill That Would Delay Fiduciary Rule

The House Financial Services has given a nod to a bill that would delay the Department of Labor (DOL) from implementing the proposed fiduciary rule. H.R. 1090, the Retail Investor Protection Act, passed the committee in a 34-25 vote on Sept. 30.

The bill, which Rep. Ann Wagner (D-Mo.) introduced on Feb. 25, would forbid the DOL from implementing the rule until 60 days after the Securities and Exchange Commission (SEC) issues a final rule governing standards of conduct for brokers and dealers. The bill also would forbid the SEC from promulgating a rule establishing an investment advisor standard of conduct as the standard of conduct of brokers and dealers before it reports to certain congressional committees whether:

  • retail investors and other customers are being harmed due to brokers or dealers operating under different standards of conduct than those applicable to investment advisors under the Investment Advisers Act of 1940;
  • alternative remedies will reduce any confusion or harm to retail investors due to brokers or dealers operating under such different standards of conduct;
  • adoption of a uniform fiduciary standard of conduct for brokers or dealers and investment advisors would adversely affect their commissions and the availability of proprietary products offered by brokers and dealers, as well as the ability of brokers and dealers to engage in principal transactions with customers; and
  • adoption of a uniform fiduciary standard of conduct for brokers or dealers and investment advisors would adversely impact retail investor access to personalized, cost-effective investment advice and recommendations.
It also would require the SEC to:

  1. publish in the Federal Register formal findings that such rule would reduce retail customer confusion or harm due to standards of conduct applicable to brokers, dealers, and investment advisors; and
  2. consider the differences in the registration, supervision, and examination requirements applicable to broker dealers and investment advisors when proposing rules.
In an interview with Investment News, Wagner said that her bill “prevents an overzealous administration from taking away sound advice for low and middle income savers,” and Chairman Jeb Hensarling (R-Texas) has pledged his committee’s support, saying “We will stand with lower and middle income savers and prevent government bureaucrats from denying them access to reliable and affordable retirement saving options.”

The bill is still awaiting action by the House Education and the Workforce Committee, which referred the measure to its Subcommittee on Health, Employment, Labor, and Pensions.

Even if the bill makes it to the floor of the full House, American Retirement Association Director of Congressional Affairs Andrew Remo does not think much of its prospects, remarking, “President Obama's forceful support of the fiduciary rule in February has muted Democratic support for the Wagner bill, ensuring its defeat in this Congress.” The Sept. 30 committee vote appears to bear that out, falling along party lines and with only one Democrat, David Scott (D-Ga.), joining committee Republicans in voting for H.R. 1090.