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A week after the Labor Department filed to begin a 15-day comment period regarding the 18-month delay of its fiduciary rule’s most onerous provisions, Sen. Elizabeth Warren, D-Mass., is urging Labor Secretary Alexander Acosta to fully implement the rule in light of recent remarks by financial and insurance company CEOs.
In her Tuesday letter to Acosta, Warren cites recent earnings calls in which the CEOs state they are “prepared to comply with the rule in its current form and that many believe it to be in the best interests of their customers.”
Warren also told Securities and Exchange Commission Chairman Jay Clayton in a separate letter the same day to “review this evidence” as the SEC solicits public comment on Labor’s rule as well as a potential uniform fiduciary rule of its own.
The letter details comments from more than a dozen executives made in earnings calls after Labor’s impartial conduct standards took hold on June 9.
These comments, Warren insisted, make clear four things: (1) Companies are well-prepared for the rule’s implementation; (2) coming into compliance with the rule is not overly burdensome; (3) the rule is consistent with their goals of putting their clients’ interests first; and (4) the administration’s previous delays have caused uncertainty for their companies, and further delays would only exacerbate this uncertainty.
Labor filed in the Federal Register on Aug. 30 a 15-day comment period on the delay of certain provisions of the rule until July 1, 2019. It also stated that it plans to propose a new, more streamlined exemption built on “recent innovations” in the financial services industry.
Warren told Acosta in her letter, however, that a delay of compliance with the rule’s prohibited transaction exemptions, like the rule’s best-interest contract exemption, “would endanger billions of dollars in Americans’ hard-earned retirement savings, and, if you enact the delay, it would ignore the preparation and positive outlook on the rule that many financial services and insurance companies have repeatedly expressed.”
CEOs from a dozen major companies commented on earnings calls held after the impartial conduct standards went into effect that companies were “well-prepared for the rule’s implementation,” Warren wrote, and that multiple companies also noted that the delays “have caused a great deal of uncertainty that would only be exacerbated by further postponement of the rule’s full implementation.”
According to Warren, Lincoln Financial President CEO Dennis Glass stated: “We think that the idea of, of course, doing what’s in the best interest of the customer is what’s kept us in business for 100 years and it’s a good idea.”
The letter quotes Ameriprise Financial Chairman and CEO Jim Cracchiolo as stating: “Regarding the Department of Labor fiduciary rule, Ameriprise and our advisors were well prepared for the June 9 implementation.”
UBS Group CEO and President Sergio Ermotti stated that “We implemented the first installation…and we think that actually is going to be positive overall in terms of the impact to the business divisions.”
In February 2016, Warren accused annuity companies of telling lawmakers that the rule would crush their business while reassuring investors on earnings calls that compliance would not be a major burden.
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Officials say in Field Assistance Bulletin 2017-03 that the IRS will also suspend enforcement.
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