Bank/Thrift Supervision   |    Capital    |    CFPB    |    Deposit Insurance    |    Interchange    |    Mortgage Finance
Municipal Advisors   |    OCC-OTS Merger   |    Preemption    |    QM - QRM    |    Swaps   |    Volcker Rule    |    Full Topics List
Qualified Mortgage - Qualified Residential Mortgage
Consumer Financial Protection Bureau - CFPB
Bank/Thrift Holding Company Supervision
Deposit Insurance
Mortgage Finance
Municipal Advisors
OCC-OTS Merger
Volcker Rule
Corporate Governance
Financial Stability Oversight Council (FSOC)
Office of Financial Research (OFR)
Systemic Risk
Supervision and Oversight
Payment, Clearing and Settlement
Prudential Supervision
Trust & Securities
Asset-Backed Securities
Resolution Authority

Thursday, August 13, 2015

ABA: Fiduciary Rule Would Harm Savers DoL Seeks to Protect

The Department of Labor’s controversial proposed rule redefining who counts as a fiduciary under the Employee Retirement Income Security Act covers far more services and customer interactions than is necessary, Northern Trust SVP Gerald Cleary testified on ABA's behalf before DoL. He said:

If adopted in its current form, the proposal will make it extremely difficult, complex, and costly for banks to deliver the investment-related products, services and information necessary to achieve a financially sound retirement. This will likely harm the very retirement investors the Department is seeking to protect.

Central to the proposal’s problems is its overbroad definition of investment advice, Cleary said. The rule could be interpreted to cover “virtually any and every investment-related conversation with a participant, beneficiary, plan fiduciary or IRA owner,” he noted — which would in turn stifle conversations with customers due to the strict ERISA requirements for fiduciaries. He said:

By promoting awkward and truncated investment discussions, the proposal is also likely to reduce customers’ trust in their retirement providers’ ability to respond to their investment needs and objectives.

Cleary, who joined dozens of other witnesses over four days of testimony, also noted that the proposal appears designed for retail investors and yet captures interactions between bank custodians and their sophisticated institutional investor customers, who do not expect their banks to act as ERISA fiduciaries. He also expressed concern about the possibility that the rule’s definition of investment advice might include periodic account statements.

Read the testimony.

No comments:

Post a Comment

Please read our comment policy before making a comment.