A group of nine financial services and business trade groups yesterday filed a lawsuit against the Department of Labor over its recent fiduciary rule, which greatly expands the definition of “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code. The rule requires banks and other financial institutions to reassess whether and how they will continue to market and sell their retirement products and services to employee benefit plans and to individual retirement accounts.
“Instead of helping savers plan for retirement, the new rule will unfortunately restrict their access to affordable retirement advice and limit their options for saving. The rule will shackle Main Street financial advisors with extensive new requirements and constant liability, forcing them to limit the options and guidance they provide to retirement savers,” the groups said. “Our organizations are now asking a court to review whether the Department of Labor overstepped its boundaries, creating a rule that will leave Americans with fewer retirement choices, higher costs and reduced access to professional financial advice.”
The rule -- which was released in April -- is set to take effect in 2017 and is estimated to cost $31.5 billion in compliance costs over the next ten years, according to a recent study by the American Action Forum.