NEW YORK (Reuters) - The U.S. Labor Department is preparing to delay its controversial Obama-era fiduciary rule on financial advice for 180 days and seek public comment on the rule.
The agency has sent two separate documents to the Office of Management and Budget for approval, according to sources familiar with the agency’s actions. One document is a proposed rulemaking that simply delays the regulation’s effective date - now April 10 - for 180 days. That proposal has a comment period as short as 15 days.
The second document would start another round of public comment on the rule, which requires brokers and other financial advisers to put their clients’ best interests first when advising them about individual retirement accounts or 401(k) retirement plans.
The Labor Department proposed the rule in September 2010 under President Barack Obama but withdrew the proposal in September 2011 after receiving criticism from the financial services industry. The department re-proposed the rule in April 2015 and made it final on April 6, 2016.
Industry critics claim the rule limits their ability to service clients who cannot afford to pay for financial advice and must use products that carry commissions or other indirect costs.
On Feb. 3, President Donald Trump ordered the Labor Department to review the fiduciary rule - a move widely interpreted as an effort to delay or kill the regulation.
On Wednesday, a U.S. District Court judge upheld the legality of the rule.
The Trump administration could write a new rule to replace or eliminate the Obama-era one. A spokesman from the Labor Department declined to comment.
Reporting by Sarah N. Lynch, with additional reporting by Liz Dilts in New York; editing by Linda Stern and Cynthia Osterman