Compliance and Regulatory Alerts - 05-22-18

Update: DOL Issues Non-Enforcement Policy on Fiduciary Rule

Update: DOL Issues Non-Enforcement Policy on Fiduciary Rule

Following the recent federal court decision to vacate the fiduciary duty rule (See Bates report here), the Department of Labor released a Field Assistance Bulletin setting forth a temporary enforcement policy applicable to investment advice fiduciaries. The new policy is intended to address uncertainty about fiduciary obligations formerly required by the DOL rule, or under the Best Interest Contract Exemption, the Principal Transactions Exemption and certain amended prohibited transaction exemptions (collectively PTEs).

The DOL acknowledged that in response to obligations imposed by these rules and exemptions, “many financial institutions created and implemented compliance structures designed to ensure satisfaction of the impartial conduct standards.”

The new temporary policy states that “for the period from June 9, 2017, until after regulations or exemptions or other administrative guidance has been issued, the Department [of Labor] will not pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the BIC Exemption and Principal Transactions Exemption, or treat such fiduciaries as violating the applicable prohibited transaction rules.” Further, the DOL stated that “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 launch of the debate over the “Best Interest” rule and investor adviser guidance may eventually resolve issues arising for firms from the vacated rule, but not in the short term. For questions regarding compliance with applicable standards, please contact Bates Group by phone at (503) 670-7772 or email Bates Compliance Solutions Managing Director Robert Lavigne to set up an appointment today.

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