(New throughout; adds industry, consumer, analyst reaction)
By Amanda Becker and Susan Heavey
WASHINGTON, March 1 The U.S. Labor Department
has taken a first step toward possible derailment or dilution of
its controversial rule on retirement advice as it begins to
re-examine it at the directive of President Donald Trump,
according to a notice made public on Wednesday.
The department proposed a 60-day delay of the fiduciary
rule, which requires retirement advisers to put the interests of
clients ahead of their own. It was slated to take effect on
April 10, but Trump asked the department to review the rule one
more time for its impact on investors.
Industry analysts and consumer groups agreed it could be the
first of multiple delays as the department begins a
comprehensive review of the Obama-era regulation, after Trump in
February issued an executive order directing the department to
review the rule.
"A 60-day delay is relatively short to undertake the type of
economic and legal analysis that they're contemplating, which
suggests to me that this isn't just going to be a 60-day delay,
It's likely going to be a string of delays," said Micah
Hauptman, with the Consumer Federation of America.
The proposed delay should have a "calming" effect on the
marketplace, which had been "hanging in limbo" ahead of the
April 10 effective date, said Denise Valentine, a senior analyst
with Aite Group, which advises the financial services industry
on regulatory issues.
"All along we've kind of known that the rule is very likely
to be amended. I don’t think it will be killed," Valentine said.
The public will have 15 days from the publication of the
proposed delay in the Federal Register on Thursday to comment on
the delay itself before the Labor Department can formalize it.
There will also be a 45-day window to submit comments or
information related to other aspects of Trump's memorandum.
The U.S. Chamber of Commerce, which has sued to kill the
rule, on Wednesday praised the proposed delay.
When former President Barack Obama's administration
finalized the rule last year, it said it was a move to help
Americans saving for their retirement.
But critics in the financial services industry say the rule
would limit the ability of advisers to service clients who
cannot afford to pay for financial advice and must use products
that carry commissions or other indirect costs.
When Trump issued the executive order, White House spokesman
Sean Spicer called the rule "a solution in search of the
problem" at a briefing ahead of the signing.
The move drew fire from Democrats and other critics, who
said it showed the Republican White House was aligned with Wall
Street, not middle-income Americans.
Industry groups, however, praised the delay proposed on
Wednesday. The Securities Industry and Financial Markets
Association said it would "allow the new administration an
opportunity to review the rule’s impact on investors and the
UBS Wealth Management Americas, Morgan Stanley
and Wells Fargo & Co. N> declined to comment. Bank
of America did not immediately respond to a request for
(Additional reporting by Elizabeth Dilts; Editing by Jeffrey
Benkoe and Dan Grebler)