The financial industry is hailing a decision by the Labor Department to delay a long-contentious rule.
The Labor Department quietly announced earlier this week that it was delaying work on a rule that would increase the standards of financial advisers. The financial sector has hotly contested the rule for years, arguing it could drive up costs and lower commissions for some advisers.
The rule would expand the definition of “fiduciary duty” to more types of retirement investment advisers. The Labor Department has said it wants to crack down on conflicting advice to pending retirees, and that duty would require advisers to act solely for the benefit of their clients.
But the industry pushback has long been fierce, as financial advocates argue such a push could simply drive out advisers for some Americans with modest assets, or drive up costs. Representatives of large financial institutions hailed the department’s decision to slow work on the rule, which was supposed to be re-proposed this summer.
“Americans face big challenges as they try to save for retirement and they don't need a regulation which adds more costs but doesn't really add more consumer protection," said Tim Pawlenty, president and CEO of the Financial Services Roundtable. “We are pleased the Department of Labor has delayed this rule and hope policymakers will now focus on creating incentives instead of barriers to saving."
The industry has had some success in bringing lawmakers on board to the cause. Several Democrats have pushed the Labor Department to slow or rework the rule. And in October, 30 Democrats joined Republicans in passing a bill that would delay the rule, even after the White House threatened to veto the measure.
The Labor Department first put forward the rule in 2010, and ever since then the industry has battled against it. In 2011, the government announced its plans to re-propose the rule that would alter a 1975 regulation, after receiving a substantial amount of public comments.