With the Department of Labor (DOL) announcing a “phased implementation” of its fiduciary rule through Jan. 1, what is required between the June 9 effective date and then? CUNA’s compliance staff examined what’s next for the rule in a recent CompBlog post.
Starting June 9, the rule’s amended definition of “fiduciary investment advice” will apply, and the Best Interest Contract (BIC) exemption and Principal Transactions Exemption will become available to fiduciary advisers.
However, for a transition period extending until Jan. 1, 2018, fewer conditions will apply to financial institutions and advisers that want to rely upon the exemptions.
During the transition period, financial institutions and advisers must comply with the “impartial conduct standards,” consumer protection standards that ensure that advisers adhere to fiduciary norms and basic standards of fair dealing.
The standards specifically require advisers and financial institutions covered by the rule to:
Full compliance with all of the exemptions’ conditions will be required on Jan. 1, 2018, absent further action by the DOL.
These conditions include, among other things, requirements to execute a contract with IRA investors with certain enforceable promises, make specified disclosures, and implement specified policies and procedures to protect retirement investors from advice that is not in their best interest.