In a comment letter filed with the Department of Labor, the Consumer Federation of America criticized the Department’s proposed new advice rule for exposing workers and retirees to conflicted retirement investment advice without adequate safeguards to prevent the advice from tainting their recommendations. The actions being taken by the Department would make it easy for financial firms to evade their fiduciary responsibilities and weaken the standard when it does apply, CFA warned.

In particular, CFA criticized the Department for reinstating an outdated, loophole-ridden definition of fiduciary investment advice that will allow investment professional to pick and choose when they are held to a fiduciary. As a result, many if not most recommendations to pull money out of a workplace retirement plan and roll it over into an IRA will not be held to a fiduciary standard. CFA also criticized the Department basing its proposed new exemption on the Securities and Exchange Commission’s weak, non-fiduciary Regulation Best Interest, and for failing to provide any enforcement mechanism for IRA investors who are harmed as a result of conflicts of interest unleashed by the proposed rule.

“Far from ‘improving investment advice for workers and retirees,’ the final rule reinstating the 1975 regulatory definition of fiduciary investment advice under the Employee Retirement Income Security Act (ERISA) and the proposal to greatly expand conflicts of interest investment advice fiduciaries can engage in when advising retirement investors seriously threaten the financial security of millions of Americans who struggle to afford a dignified and independent retirement. The only beneficiaries are the powerful financial firms who would remain free under this regulatory approach to siphon billions of dollars each year out of the retirement accounts of working Americans to line their own pockets,” CFA wrote.