DOL | ERISA | Fiduciary

DOL Fiduciary Rule Delayed until June 9; Fewer Compliance Requirements in Interim

The Department of Labor’s 60-day delay to the new fiduciary rule, (f/k/a the “Conflict of Interest Rule”) has been finalized, changing the effective date from April 10 until June 9, 2017.  The applicability date of all of the new and amended prohibited transaction exemptions, including the Best Interest Contract Exemption (“BICE”) has also been extended until June 9, 2017.  But the big surprise is that the DOL has significantly reduced the compliance burdens during the transition period (from June 9, 2017 to January 1, 2018).  Financial institutions that want to rely on the prohibited transaction exemptions cited in the Fiduciary Rule now no longer will have to provide transition disclosures, appoint a BICE officer, or create transition agreements.

The bottom line is that during the transition period, financial institutions that want to rely on BICE and the Class Exemption for Principal Transactions only have to comply with the Impartial Conduct Standards (best interest standard of care, reasonable compensation and not making any materially misleading statements).  Compliance with all other conditions of these exemptions, including written disclosures and representations, are waived until January 1, 2018.

The pre-existing class exemptions amended as a result of the Fiduciary Rule will apply and be in full force on June 9, 2017, specifically, Prohibited Transaction Class Exemptions 75-1; 77-4, 80-83, and 86-138.