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DOL Seeks 18-Month Delay of Best Interest Contract Exemption and Other Fiduciary Rule Exemptions

On Behalf of | Aug 9, 2017 |

In an August 9, 2017 court filing, the U. S. Department of Labor (“DOL”) announced that it had, on August 9, taken steps to delay the date for full implementation of the Best Interest Contract Exemption (“BICE”) and other related prohibited transaction exemptions that provide relief from the application of DOL’s recent regulation defining fiduciary and investment advice (the “Fiduciary Rule”). Currently, those exemptions (BICE, Principal Transactions, and PTE 84-24, which covers compensation paid in the insurance and securities brokerage context) are in effect but generally require only compliance with the “impartial conduct standards” during the Transition Period, commencing on June 9, 2017. The full conditions of the BICE (including, for example, the IRA contract and private right of action requirements) and the other exemptions apply after the end of the Transition Period. Although the Transition Period is currently scheduled to end on January 1, 2018, the DOL’s court filing states that the DOL seeks to extend the Transition Period by 18 months, to July 1, 2019. If adopted, it appears that the BICE, Principal Transaction Exemption, and PTE 84-24 will continue to be available as long as the impartial conduct standards are satisfied, without regard to any other conditions of those exemptions.

The DOL’s court filing, made in a case brought against the DOL by Thrivent Financial, is less than two pages long and does not contain any details or discussion about the DOL’s proposed 18-month extension. However, the DOL’s filing states that the full proposal should be available to the public tomorrow, August 10, 2017. We will provide additional information once the DOL’s complete Office of Management and Budget submission, wherein it seeks to amend the BICE and other exemptions, becomes available.