The House passed legislation on Tuesday to prevent the Labor Department from finalizing a controversial regulation to expand investment advice standards for retirement accounts.
Rep. Ann Wagner’s (R-Mo.) bill, passed 245-186, would prohibit the Labor Department from moving forward until the Securities and Exchange Commission issues a final rule that would apply to all retail investment counsel.
The Obama administration says the the rule is needed to help consumers understand that their financial advisers might have a conflict of interest with Wall Street institutions.
But opponents of the regulation argue that the proposal, often referred to as the “fiduciary rule,” would increase regulatory costs for financial firms and discourage them from taking on lower-income clients.
“Unfortunately, this rule-making from the Department of Labor could potentially cut access, limit choice and raise costs for that kind of financial advice, putting the goal of retirement even further out of reach,” Wagner said.
President Obama has issued a veto threat against the measure.
“This legislation puts a roadblock in the way of preventing such harmful conflicts, which hurts businesses, consumers, and retirees and their families,” the White House said in a Statement of Administration Policy.
Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, said that forcing the SEC to act first was simply a way to stall the final Labor Department (DOL) rule.
“While we should clearly encourage the Securities and Exchange Commission to also update its own rules on investment advice over securities, we should not make retirement savers wait any longer for protection by hinging the DOL’s rulemaking to the SEC’s,” Waters said.
The House passed similar legislation in 2013, but the Senate did not take it up.