A Republican regulator at the U.S. Securities and Exchange Commission urged the Labor Department on Tuesday to scrap its fiduciary rule, which aims to reduce conflicts of interest when brokers offer retirement advice, saying it was misguided.
In a comment letter to the Labor Department, SEC Commissioner Mike Piwowar said the rule, which requires brokers giving retirement advice to put their clients’ best interests first, could harm the broker-client relationship.
The rule, which has been partly implemented and was proposed during former President Barack Obama’s administration, has been championed by consumer advocates and retirement non-profits.
It is opposed by the financial services sector, which fears it will make retirement advice too costly for lower-income investors. Congressional Republicans have also been critical, with many saying the SEC should take the lead because it is the primary brokerage regulator and has more expertise than the Labor Department.
Industry groups have tried to get the rule overturned in a variety of lawsuits, so far without success.
Earlier this year, President Donald Trump ordered the Labor Department to study the rule to determine if it should be amended or scrapped.
The department is soliciting comments on whether it should be reconsidered.
Piwowar said in his letter that the Labor Department’s rule was too dismissive of the important role that disclosures required by the SEC can play in helping guard against conflicts of interest.
He also said the rule in its current form failed to adequately distinguish between “selling” activities and “advice” activities.
(Reporting by Sarah N. Lynch; Editing by Peter Cooney)
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