Many industry observers were left scratching their heads after the Department of Labor first delayed and then canceled just a few days later the investment advice rule that it finalized at the beginning of the year. However, as reported earlier this fall, DOL has every intention of putting new rules into place. While it was originally thought a new rule proposal would be ready for public comment by mid-November, the administrative process has taken longer than expected. According to recent reports, DOL has sent new proposed rules to the Office of Management and Budget for approval and will likely release those rules for a short comment period in December or January.
Meanwhile, investment advice provisions being considered on Capitol Hill also appear to be set for the chopping block. Earlier this year, House Education and Labor Committee combined two separate bills to create the 401(k) Fair Disclosure and Pension Security Act of 2009 (HR 2989), which would cover both investment advice and 401(k) fee disclosure. The bill was voted out of committee over the summer and referred to the House Ways & Means Committee, which held a hearing in October to consider the legislation. During the hearing, the bill received sharp criticism from Rep. Earl Pomeroy for proposing to reduce independent advice presently available under DOL's SunAmerica advisory opinion, which allows advice to be offered by providers through an affiliate using an independently developed computer model. As a result of the criticism and decreased support, the Ways & Means Committee likely will remove the advice provisions from the bill later this month, but no official decision has been made yet.
Though new legislation could be introduced in the future, for now, Congress appears to be clearing the way for DOL to take the lead on providing guidance on investment advice. And DOL appears to be determined to move forward with a new rule without further delay. What remains unclear, however, is what the new rule will look like and how it will compare to the legislation or the rule proposed by the Bush Administration. So for now, the industry must wait until the proposal is released in the coming weeks.
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