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November 30, 2017
DOL Extends Transition Period for Fiduciary Rule Exemptions

On November 27, the U.S. Department of Labor (DOL) announced an 18-month extension—from January 1, 2018 to July 1, 2019—of the special Transition Period for the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24 (PTEs). This extension follows public comment on a proposed extension that was published in August.

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SavingsThe extension, according to a DOL press release, gives the DOL time to consider public comments submitted pursuant to the DOL’s July 2017 Request for Information, and the criteria set forth in the Presidential Memorandum of Feb. 3, 2017, including whether possible changes and alternatives to exemptions would be appropriate in light of the current comment record and potential input from, and action by, the Securities and Exchange Commission, state insurance commissioners, and other regulators. The President directed the DOL to prepare an updated analysis of the likely impact of the Fiduciary Rule on access to retirement information and financial advice.

During the extended Transition Period, fiduciary advisers have an obligation to give advice that adheres to “impartial conduct standards.” These fiduciary standards require advisers to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services, and refrain from making misleading statements.

Further, between now and July 1, 2019, when the exemptions’ remaining conditions are scheduled to become applicable, the DOL intends to complete its review under the Presidential Memorandum and decide whether to propose further changes.

The DOL has also announced an extension of the temporary enforcement policy contained in Field Assistance Bulletin 2017-02 to cover the 18-month extension period. Therefore, from June 9, 2017, to July 1, 2019, the DOL will not pursue claims against fiduciaries working diligently and in good faith to comply with the Fiduciary Rule and PTEs, or treat those fiduciaries as being in violation of the Fiduciary Rule and PTEs.

The extension will be published in an upcoming edition of the Federal Register.

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