U.S. House passes long-shot bill to block fiduciary rule
(Bloomberg) — Republican lawmakers aren’t giving up yet in their fight to kill stricter rules for brokers that have been championed by President Barack Obama.
In what might prove a symbolic vote, the U.S. House passed legislation 234-183 Thursday that would block a Labor Department rule requiring financial advisers to put their clients’ interests ahead of their when handling retirement accounts. To become law, the House measure must be approved by the Senate and signed by Obama, whose administration announced Wednesday that he would veto the bill if it reaches his desk.
Labor released what’s known as the fiduciary duty rule earlier this month, with administration officials saying it will help protect millions of savers from conflicted investment advice that costs the public $17 billion annually. For financial firms that have fought the new regulation for six years, stopping it from taking effect probably requires help from Congress or winning a legal battle in the courts.
In a release, the Independent Insurance Agents & Brokers of America praised the Passage of the bill.
“The fiduciary rule places new restrictions on Big ‘I’ members who offer retirement advice related to most IRAs and 401(k)s, as well as some HSAs,” says Charles Symington, Big “I” senior vice president of external and government affairs. “The rule, while arguably well-intentioned, will make retirement advice more costly and complicated, particularly for the middle class leading to less consumer choice.”
“This harmful rule is expected to start taking effect in April 2017 and be fully implemented by Jan. 1, 2018, barring congressional or legal action,” adds Symington. “The Big ’I’ is grateful for the House’s swift consideration of the resolution and urges Senate action.”
The White House has said the tougher standard will eliminate hidden incentives that cause brokers to push investment products with high fees and commissions. The industry argues that the rule will hurt less-affluent investors, because firms facing steeper compliance costs will drop smaller accounts.
Previous lawmaker efforts to kill the Labor regulation have failed.
Congress’ latest attempt relies on a rarely-used law called the Congressional Review Act that allows what’s considered to be “major” new rules to be overturned. To date, the Congressional Review legislation has been successfully used just once to stop a regulation.
Additional reporting by Online Managing Editor Brian M. Kalish