DOL Fiduciary Rule Transition Period Extension to 2019 Requested

The Secretary of Labor, Alexander Acosta, made a court filing on August 9 requesting the Transition Period and Delay of Applicability for the Department of Labor Fiduciary Rule be extended from January 1, 2018 to July 1, 2019.

This court filing included extending the deadlines for the following Prohibited Contract Exemptions:

  • Best Interest Contract Exemption (PTE 2016-01): Relief for an adviser to still accept variable commissions
  • Class Exemption for Principal Transactions (PTE 2016-02): Relief for an investment adviser or broker-dealer to still engage in a riskless principal or principal transaction
  • PTE 84-24: Relief for an adviser to still accept third-party payments for insurance products

Per most recent guidance, firms are still expected to adhere to the Impartial Conduct Standards component of the Rule throughout the Transition Period, meaning:

  • Acting in the client’s best interest
  • Receiving no more than reasonable compensation
  • Making no misleading statements

Given the request for an extension and other open matters concerning the Fiduciary Rule, Ascendant believes that firms will delay making any additional changes to their policies and practices until further guidance is issued.

Note that this delay comes days after a comment letter the Insured Retirement Institute (IRI) submitted in response to the Department of Labor’s request for comment in June. The IRI letter provided data that the fiduciary rule was “causing customers to lose access to valuable retirement products and services,” citing an increased number of advisers ceasing services for accounts with a small balance. Also this week, the DOL published an FAQ on the Transition Period, stating that recommending to an investor that they increase their contributions to retirement accounts does not constitute fiduciary advice, so long as they do not “include recommendations with respect to specific investment products or recommendations with respect to investment management of a particular security or other investment property.”

With the SEC also issuing a Request for Comment in June regarding Standards of Conduct for Investment Advisers and Broker-Dealers, we expect to see continued developments and cross-agency dialogue on this topic in the coming months. We will continue to keep you informed of new developments.

Latest Content

Schedule 13D/13F Clarity on ETF Issues

Do I need to file a 13D or 13G if my client accounts hold in excess of 5% of an ETF? Generally, no. The SEC has granted no-action relief to ETFs with respect to compliance with Section 13(d) of the Securities Exchange Act. Section 13(d) was designed to require disclosure when holders begin to accumulate … Continued

New Remedy Coming for SEC’s Custody Rule?

The SEC’s Custody Rule continues to be a common source of confusion and a landmine for noncompliance. Custodial paperwork has caused huge headaches for investment advisers, who are not a party to the agreement and may not even have a copy of the custodial new account paperwork. The issue with existing guidance is that it … Continued

SEC Issues MiFID II No-Action Relief

Some industry anxiety was assuaged on October 26 with three no-action letters that offer relief for some US regulated broker-dealers and investment advisers regarding European MiFID II regulations. The letters followed consultation with the European authorities, and are designed to address concerns that investors could lose access to valuable research. MiFID II is a series of regulations … Continued

Regulatory Changes Impacting RICs and Service Providers

A year ago, the SEC adopted Investment Company Reporting Modernization Rules and Forms, as well as rules pertaining to liquidity risk management programs and swing pricing. New forms N-Port and N-Cen along with amendments to Regulation S-X significantly change the current reporting regime for most registered investment companies (RICs) because they require more comprehensive disclosure and … Continued

Publicly Available Information Heightens Need for Cybersecurity Vigilance

For any business, “ports” that allow for communication generally need to be open (for example, ports 80 and 443 for websites, and port 500 for VPN access). While most of these ports allow you to engage in critical functions, there are often ports that remain open despite being unneeded or unused. These available ports present … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.