Sen. Scott Backs Effort to Stop Obama-Era ‘Fiduciary Rule’
WASHINGTON – The same week the Fiduciary Rule is set to go into effect, Sen. Tim Scott (R-SC) joined several of his colleagues in reintroducing legislation designed to fight implementation of a misguided, big-government Obama-era rule that will harm retirement planning access for hardworking Americans.
Known as the “fiduciary rule” and found in the fine print of hundreds of pages of U.S. Department of Labor regulations, the Obama administration’s Department of Labor sought to redefine the word “fiduciary.” Fallout from this misguided overreach is already resulting in increases in required minimum balances in retirement accounts and the loss of access to investment advice for thousands of Americans.
The introduced legislation, the Affordable Retirement Advice Protection Act, S.1321, would preserve access to quality financial planning and ensure that retirement advisors serve the best interests of low- and middle-income Americans. It would also amend the Employee Retirement Income Security Act of 1974 to raise investment advice standards for the retirement industry and strengthen protections for those saving for retirement. Scott joined U.S. Senators Johnny Isakson (R-GA), Lamar Alexander (R-TN), chairman of the Senate Committee on Health, Education, Labor, and Pensions, Pat Roberts, (R-KS), and Todd Young (R-IN), all original co-sponsors of the legislation.
“Hardworking American families deserve access to affordable and reliable investment advice,” said Scott. “In its current form, the Department of Labor’s fiduciary rule will limit a saver’s ability to acquire basic investment education and assistance. How are families supposed to grow their nest eggs, prepare for retirement, and take care of their children’s future if the federal government restricts how they receive financial counsel? While I remain disappointed by the Department of Labor’s decision to move ahead with the rule, I will push both the DOL and Securities and Exchange Commission to work together to minimize the damage it will do to the retirement security of everyday people.”
The Affordable Retirement Advice Protection Act seeks to block the Department of Labor’s harmful fiduciary rule and to provide a viable alternative that would:
- Raise standards for the retirement services industry and strengthen protections for savers by directing retirement advisors to serve in their clients’ best interests
- Penalize financial professionals who violate the trust of their clients
- Require clear communication of key information by advisors to ensure investors are well informed to make investment choices
- Ensure advice and investment options are available to individuals seeking retirement savings guidance to best meet their needs and circumstances.
Since the rule was announced by the Obama administration, Scott has been aggressive about stopping its implementation, which included sending a letter to Labor Secretary Acosta urging him to conduct an immediate review of the rule. Full text of the letter sent on April 28 can be viewed here.
Full text of the Affordable Retirement Advice Protection Act can be viewed here.
In October 2010, the Department of Labor proposed rewriting its regulatory definition of a “fiduciary,” allegedly to protect individuals from misleading investment advice. However, the administration later withdrew its rule amid widespread, bipartisan criticism that the proposal would essentially prevent lower- and middle-income investors from gaining access to the advice market and would likely result in confusion and ultimately discourage savings participation.
Despite these concerns, the Department of Labor again proposed a fiduciary rule in April 2015 that fails to address many of the concerns raised over the previous rule.
On January 28, 2016, the Department of Labor submitted its final fiduciary rule to the Office of Management and Budget.
On Feb. 3, President Trump recognized the flaws of this big-government regulation and directed the labor department to further study the new rule, originally scheduled to take effect on April 9. The department subsequently delayed the application of the fiduciary rule until June 9.
Secretary Acosta then announced that the department needs more time to consider its options for addressing this rule. However, following the current delay of the rule, this rule will go into effect despite some non-enforcement provisions designated by the Department of Labor.