DOL Delays Fiduciary Rule Effective Date

The 18-month extension of the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transaction Exemption requirements will give the Department more time to consider public comments.

12/5/17

The U.S. Department of Labor announced an 18-month extension of the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transaction Exemption requirements. The new effective date will be July 1, 2019.

The extension gives the Department the time necessary to consider public comments submitted pursuant to the Department’s July Request for Information, and the criteria set forth in the Presidential Memorandum of Feb. 3, 2017, including whether possible changes and alternatives to exemptions would be appropriate.

During the extended Transition Period, fiduciary advisers have an obligation to give advice that adheres to “impartial conduct standards.” These fiduciary standards require advisers to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services, and refrain from making misleading statements.

Between now and July 1, 2019, when the exemptions’ remaining conditions are scheduled to become applicable, the Department intends to complete its review under the Presidential Memorandum and decide whether to propose further changes.

The Department has also announced an extension of the temporary enforcement policy contained in Field Assistance Bulletin 2017-02 to cover the 18-month extension period. Thus, from June 9, 2017, to July 1, 2019, the Department will not pursue claims against fiduciaries working diligently and in good faith to comply with the Fiduciary Rule and PTEs, or treat those fiduciaries as being in violation of the Fiduciary Rule and PTEs.

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA has released its Fourth Quarter Newsletter. The NCUA’s newsletter includes articles on cyber threats, cryptocurrency, economic outlook, and information on the NCUA’s new Office of Credit Union Resources and Expansion.

The NCUA announced that it was awarded over $500,000 in grants to help credit unions reach underserved members. The grants will help credit unions provide financial literacy coaching, provide micro-loans to small businesses, provide payday alternative loans, and encourage credit union partnerships with community organizations.

The NCUA announced that it has named Mary Anne Bradfield as Director of Public and Congressional Affairs.

Department of Labor (DOL)

The DOL published a final rule that delays the effective date of the Fiduciary Rule. The rule will now be effective on July 1, 2019.

Federal Housing Finance Agency (FHFA)

The FHFA announced that maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2018. The limit will be increasing from $424,100 to $453,100.

Office of the Comptroller of the Currency (OCC)

The OCC announced that Joseph M. Otting is the new Comptroller of the Currency.

The OCC announced that it will not increase its assessment amount for 2018. The OCC also released its fee schedule for 2018.

Federal Reserve Board (FRB)

The FRB has released updates to The Beige Book.

FRB Chair Janet Yellen delivered testimony on the Current Economic Outlook and Monetary Policy before the Joint Economic Committee.

The FRB released the minutes from its most recent Discount Rate Meetings.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of November 29, 2017. The last update prior to this was November 21, 2017.

Question of the Week

We have an individual with a POA requesting to access a living trust account. Does a POA allow access to a trust account?

A power of attorney, on its own, is not sufficient to grant authority on a trust account. However, if both the POA document and the trust document allow for the use of a POA, then it can be used to access the trust. However, the language must be present in both documents. Trust powers expressed in a POA document only are not enough to allow the attorney-in-fact to act on the trust account.

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Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.