The U.S. Labor Department will implement its fiduciary rule on June 9 with no further delays, U.S. Labor Secretary Alexander Acosta said on Tuesday.
The department’s rule, which requires brokers offering retirement investment advice to act in the best interest of their customers (that is, under a “fiduciary” standard), has been heavily criticized by Republicans and Wall Street amid concerns it may make investment advice too costly.
The fiduciary rule was drawn up under the Obama administration amid concern that many retirement savers were being steered into high-cost investments that could eat away at their savings. The rule is intended to discourage brokers and other financial professionals from putting retirement-plan assets into products that pay high commissions or profit-sharing compensation to the brokers–a practice that’s currently legal as long as the investments can be portrayed as “suitable” for the customer.
The rule has faced a rocky time becoming effective, with President Trump last month delaying its enactment date, originally April 10, for 60 days. Trump has also ordered a review of the rule.
Acosta, in an opinion piece for the Wall Street Journal, which was also shared with Reuters, said there was “no principled legal basis to change the June 9 date while we seek public input.”
Calling the fiduciary rule a “controversial regulation,” Acosta said that while courts have upheld the rule as consistent with Congress’ delegated authority, it may not align with Trump’s “deregulatory goals.”
He also said the department was seeking “public comment” on how to revise the rule, leaving open a possibility of repealing the rule in future.
“These are signs of positive movement for advisers and active managers despite industry disappointment that Labor failed to kill the rule,” Cowen and Co. analyst Jaret Seiberg said in a client note.
Some Democratic Senators on Friday raised concerns over the possibility that the Trump administration will permanently shelve the fiduciary rule.