The U.S. Chamber of Commerce said on Monday it is prepared to sue the federal government if it finds a proposed rule on financial advisers meant to protect retirees is unworkable.
The rule would create a “fiduciary standard,” meaning that brokers who give retirement advice must act in their clients’ best interest. The goal is to keep retirees from buying unnecessary products that line their brokers’ pockets through fees and commissions.
Financial and insurance companies have warned the proposal could drive up costs and stop them from offering retirement services such as annuities to middle- and lower-income people.
“Given how important this issue is… I think we have to at least consider the need to go to court,” said David Hirschmann, president of the business group’s Commerce’s Center for Capital Markets Competitiveness, in a call with reporters.
“We’re certainly prepared to do that if the changes aren’t made, but we won’t make a final decision until the ink is dry,” he added.
The standard, required by the 2010 Dodd-Frank law reforming Wall Street, has traveled a rocky road to fruition.
In January, the Department of Labor (DOL) sent a revised proposal for an adviser rule to the White House’s Office of Management and Budget. Details will not be made public until the office completes its review, which is expected this month.
Widespread criticism from the industry and lawmakers on the forced the department to withdraw its initial proposal in 2011.
The Chamber wants various changes in the new version, including how and when advisers and clients sign contracts, and clarity on how variable-rate annuities are treated.
“The areas that need to change on the DOL fiduciary rule are pretty clear,” Hirschmann also said. “It’s really about: is the final rule something that will work? And I say that that way because that’s really the guidepost we will use in deciding whether to sue.”
Hirschmann also said the Chamber met with the Office of Management and Budget. It was “very much a one-way conversation” and the office did not share details about the draft it is reviewing, he said.
(Reporting by Lisa Lambert; Editing by Alan Crosby)