DOL Announces Temporary Fiduciary Rule Enforcement Policy

May 2018

The Department of Labor (DOL) announced a temporary enforcement policy on May 7th explaining that it would not pursue legal action against investment advice professionals who rely on the Obama Administration’s definition of fiduciary.
 
According to Field Assistance Bulletin 2018-02 (FAB 2018-02), the DOL said it would not “pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards” set in the fiduciary regulation crafted by the Obama Administration.
 
That regulation was vacated in March by the 5th Circuit Court of Appeals in the case brought by plaintiffs led by the U.S. Chamber of Commerce against the DOL (case 17-10238). In the decision, the court said that the Obama Administration’s fiduciary requirements were excessive, arbitrary and capricious.
 
The DOL said it plans to provide guidance in the future, but until then financial institutions should be allowed to rely on the Obama rule. The May 7th FAB recognized that providers have devoted significant resources to comply with the Obama definition of fiduciary and that there may be uncertainty to the rule as a result of the 5th Circuit Court of Appeals decision.
 
“Of course, investment advice fiduciaries may also choose to rely upon other available exemptions to the extent applicable after the Fifth Circuit’s decision, but the Department will not treat an adviser’s failure to rely upon such other exemptions as resulting in a violation of the prohibited transaction rules if the adviser meets the terms of this enforcement policy,” the FAB said.
 
BDO is committed to keeping plan sponsors and their service providers updated on the latest guidance from the DOL regarding the fiduciary standard. In the meantime, if you have questions about what the latest guidance could mean for your retirement plan, please contact your BDO representative.
 

CONTACT:
 
Joanne Szupka
Assurance Director
Northeast Region Practice Leader
   Beth Garner
Assurance Partner
National Practice Leader, Employee Benefit Plan Audits