The Labor Department is planning to delay the enactment of a major Obama-era conflicts-of-interest investment rule for 18 months, the agency said in a court filing Wednesday.
In a court filing, the agency said that it is planning to extend the effective date for the remaining provisions of the "fiduciary rule" until July of 2019. It was set to take effect in January, 2018.
The Labor Department is defending itself in a lawsuit filed against the rule.
The rule in question requires all advisers managing tax-privileged retirement accounts to act in their clients' best interests, a legal standard that Obama sought in order to crack down on possible conflicts of interest. The problem, in the Obama administration's view, is that some advisers and brokers steer clients into inappropriate investment products for which they receive kickbacks.
Part of the rule went into effect in June, over the objections of the industry and congressional Republicans. The Labor Department is proposing to delay a major provision of the rule that would allow advisers to serve clients only if they sign a contract that the financial industry has said is unduly burdensome.
A delay would be a win for the investment professionals that have tried to stop the rule via the rulemaking process and by lobbying for legislation.
Dale Brown, the head of the Financial Services Institute, said that the proposed delay is an "important step" in protecting investors who might lose access to retirement advice under the rule. "While the delay is significant, it is critical that the DOL uses the 18 months to coordinate with regulators, in particular the SEC, to simplify and streamline the rule," he added.
A Labor spokesman referred an inquiry for comment to the Department of Justice, which is handling the legal action. A Justice Department spokesman said that the agency declined to comment.
In a statement, Sen. Patty Murry of Washington, the ranking Democrat on the Health, Education, Labor, and Pensions Committee, called the decision"deeply disappointing and yet another example of how President Trump has shattered his promises to ‘drain the swamp' and stand with working families."
News of the court filing was first reported by Investment News, an industry publication.