Washington, D.C. – With the comment period closing on the Department of Labor (DOL) rule proposal to strengthen protections for retirement savers, the Consumer Federation of America (CFA) called on the Department to resist industry efforts to water down the core protections of the rule.
“While adjustments can and doubtless will be made to clarify and streamline certain of the rule’s operational requirements, the rule’s overall framework is sound,” said CFA Director of Investor Protection Barbara Roper. “None of the alternatives suggested by industry come close to matching its comprehensive protections, and nothing that industry has submitted during the comment process should deflect the Department from its goal of moving forward quickly to finalize this rule with its core provisions intact.”
CFA’s comment letter, filed with the Department today, counters industry arguments aimed at reopening loopholes in the definition of fiduciary investment advice and weakening the fiduciary standard that applies to such advice, offers concrete suggestions for how sales-based financial firms can reform their compensation practices to better align with the best interest standard, and rebuts industry comments and “studies” that attempt to impugn the Department’s economic analysis.
“Industry wants credit for being constructively engaged to make the rule more ‘workable,’ but their alternative proposals and the bulk of their comments are focused on reopening loopholes in the definition of fiduciary investment advice, watering down the best interest standard that applies to advice, and relieving themselves of any obligation to restrict practices that encourage advice that is not in retirement savers’ best interests. American families struggling to save for a secure and independent retirement deserve better,” Roper said.
In addition to attacking core provisions of the rule, industry opponents have submitted a variety of “studies” seeking to call into question the economic justification for the rulemaking. The CFA letter scrutinizes these studies and concludes that most are simply advocacy pieces dressed up as economic analysis. “These industry studies are not serious economic analyses. They have some common characteristics, including misrepresenting market data that is publicly available, making unsupported claims based on proprietary data that they refuse to make publicly available, and engaging in wild speculation about the rule’s effects without any basis in logic or fact,” said CFA Financial Services Counsel Micah Hauptman. “We’re confident that the Department will see through the glaring holes in these baseless industry attacks on their analysis.”
Contact: Barbara Roper, 719-543-9468; Micah Hauptman, 202-939-1004
The Consumer Federation of America is a nonprofit association of more than 250 nonprofit consumer groups that was established in 1968 to advance the consumer interest through research, advocacy, and education.