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Department of Labor postpones enforcement of fiduciary rule until 2022

On Behalf of | Oct 28, 2021 | Securities and Compliance

The Department of Labor has announced it will be extending the compliance date for its fiduciary advice rule until February 1, 2022, according to InvestmentNews.

The regulation, called “Improving Investment Advice for Workers & Retirees Exemption”, was passed in December 2020 and took effect last February. It permits fiduciaries in retirement plans to be exempt from certain prohibited transactions provided they adhere to a number of impartial conduct standards. By meeting these conditions, brokers and investment advisors would then be permitted to earn fees from third parties when recommending certain investments.

The DOL initially said fiduciaries would have until Dec. 20, 2021 to bring themselves into compliance with the new rule, saying it would not pursue claims against those who worked diligently and in good faith to comply. But in a field assistance bulletin issued on Monday, the department said it “understands that the December 20, 2021 expiration date of the temporary enforcement policy poses practical difficulties for financial institutions that are in the process of complying with the exemption conditions.”

The extension of the enforcement date came in response to concerns from industry advocates that more time would be needed for financial professionals to comply. In the field assistance bulletin, the DOL also said it would not enforce the specific documentation and disclosure requirements for rollovers through June 30, 2022.

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