On Tuesday, the House approved legislation that would delay a Labor Department regulation that would impose fiduciary standards for financial advisors. The measure, sponsored by Rep. Ann Wagner, R-Mo., would prohibit DOL from proposing its regulation until 60 days after the Securities and Exchange Commission finalizes a similar rule to raise standards for brokers providing retail investment advice. The bill attracted the support of 30 Democrats. On Monday, the Obama administration threatened to veto the legislation, saying that it undermines DOL efforts to protect workers and retirees from conflicted investment advice for 401(k) plans and individual retirement accounts. Supporters of the bill say the SEC must go first to ensure coordination between the agencies and avoid duplicative and costly fiduciary-duty requirements that would ultimately limit access to investment advice for smaller investors. Opponents say it would effectively kill the DOL rule if the SEC declines to propose its own regulation.
The legislation, which also would require the SEC to prove that investors are being harmed by the differences between the advice standards governing investment advisers and brokers before it proceeds with its own rule, faces an uncertain future in the Democratic-led Senate. The DOL is expected to repropose the fiduciary rule which was originally proposed in 2010 and withdrawn amid fierce financial industry backlash.