Washington, D.C. – A regulatory package being rushed through by the Department of Labor (DOL) in the guise of improving retirement investment advice for workers and retirees would instead benefit powerful financial firms at retirement savers’ expense, Consumer Federation of America (CFA) warned in a comment letter filed with the agency today. CFA called for the regulatory package to be withdrawn in its entirety.
“This regulatory package is a multi-billion-dollar transfer of wealth from the retirement accounts of American working families to the wealthiest, most powerful financial firms,” said CFA Director of Investor Protection Barbara Roper. “Instead of strengthening protections for workers and retirees, it makes it easier for financial firms to profit unfairly at their expense. In short, the big beneficiaries of this regulatory package are the very same financial interests Labor Secretary Eugene Scalia represented when he was in private practice and will likely represent again when he leaves his position at the Department of Labor,” Roper added.
The DOL regulatory package consists of two components which work together to make it easier for financial firms to evade any fiduciary obligation and to weaken that standard when it does apply:
- A final rule reinstating a 1975 regulatory definition of fiduciary investment advice that it is so riddled with loopholes that it enables firms to decide for themselves when and if they want to be held to a fiduciary standard; and
- A proposed new exemption, modeled on the Securities and Exchange Commission’s weak, non-fiduciary Regulation Best Interest, which would enable firms providing retirement investment advice to engage in a wide range of conflicts of interest without adequate safeguards to prevent those conflicts from tainting their advice.
“This package combines the worst of both worlds,” said CFA Financial Services Counsel Micah Hauptman. “Firms that don’t want to be fiduciaries won’t have to be, and those that are fiduciaries will be allowed to provide harmful, self-interested advice.”
“Workers and retirees desperately need retirement investment advice they can trust,” Roper concluded. “They will not get it under the DOL’s advice rule.”
Barbara Roper, 719-543-9468
Micah Hauptman, 269-939-1004