Although the Rule will take effect in part on April 2017, with full implementation in January 2018, there are already legal challenges to it.
According to BusinessWire, various entities led by the U.S. Chamber of Commerce filed a lawsuit in federal court challenging the Department of Labor’s fiduciary rule for brokers and registered investment advisers serving Americans with Individual Retirement Accounts (IRAs) and 401(k) plans.
The CEOs of several of the above plaintiffs issued a statement claiming “support for the creation of a uniform best interest–or fiduciary–standard of customer care for financial professionals providing personalized investment advice to retail investors.” But they objected to the length and content of the Department of Labor’s rule and claimed that the Rule would limit the options and guidance provided by advisors to retirement savers.
Among other things, in the Complaint, the Plaintiffs assert that the Rule:
- would “upend” “well-developed regulatory framework, with harmful consequences for retirement savers, small businesses, and tens of thousands of businesses . . . that provide retirement advice, products, and services,”
- “will limit consumer choice by forcing those who need retirement investment assistance to obtain it only by entering a fiduciary relationship, and bearing the accompanying costs, or to forgo it entirely,” and that
- “small businesses in the United States will be hampered in their ability to maintain retirement plans for their workers.“
This litigation was not unexpected, as InvestmentNews reports. The Labor Department has said it expected legal challenges over the rule and is confident that it will prevail in court.