WASHINGTON (7/22/15)--The U.S. Department of Labor (DOL) should more narrowly tailor what it considers "investment advice," CUNA told the agency in a comment letter filed Monday.
In the letter, CUNA expresses concerns about several aspects of a proposed rule including its potential impact on credit union members seeking information for retirement and planning for their futures.
Under the DOL’s proposal, a person who receives compensation for advice to an individual, plan sponsor, plan participant or individual retirement account (IRA) owner about making a retirement investment decision would be considered a “fiduciary,” with several exceptions.
For most credit unions offering brokerage services, compliance with this proposal will not fall on the credit union, since many have clearly defined arrangements with third-party brokers outlining duties and responsibilities.
However, the comment letter expressed that it is necessary for the DOL to analyze how it can more narrowly tailor the definition of "investment advice" to ensure that credit union employees, who are only tangentially involved in providing investment services, are not included in the rule.
In addition, CUNA is concerned that the DOL enforcement mechanism of class action litigation could sweep in credit unions in their role as sponsor-dealers of these brokers. CUNA is also concerned that the rule could affect credit unions under less common circumstances, particularly in situations where credit unions share employees with a broker-dealer.
In addition, the complex nature of the rule and additional oversight required could reduce options available to credit union members seeking investment products. The National Credit Union Administration, Consumer Financial Protection Bureau, Financial Industry Regulatory Authority and Securities and Exchange Commission all can have some form of regulatory say in credit unions with investment products.
“Any additional oversight in this area is unnecessarily duplicative and could be burdensome to credit unions who are already facing a multitude of regulatory hurdles,” the letter reads. “An unintended expansion of what is considered investment advice or fear of qualifying as an [Employee Retirement Income Security Act of 1974] fiduciary could cause credit unions to avoid offering investment services to their members.”