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ABA to DOL: Fiduciary Proposal Puts Popular Bank Services at Risk Print E-mail
Friday, 14 August 2015

WASHINGTON — The Department of Labor’s (DOL) proposed fiduciary rule would put at risk popular bank services, particularly IRAs and defined contribution plans, according to testimony from the American Bankers Association (ABA) before the Department of Labor today.

Gerald Cleary, senior vice president for The Northern Trust Company in Chicago, testified on behalf of ABA.  Cleary emphasized the importance of revising the proposal to address unintended consequences that would harm the people the rule is meant to protect and would layer complex rules on top of the high standards banks already follow in this area.

“The Department’s proposal is overbroad and captures many persons providing valuable services to plans and retirement investors who should not be viewed as fiduciaries under either ERISA or the Code,” Cleary said. “If adopted in its current form, the proposal will likely harm the very plan participants, beneficiaries and IRA account owners that the Department is seeking to protect by making it extremely difficult, complex and costly for banks and other service providers to deliver the products, services, and information necessary to achieve a financially sound retirement.”

Cleary noted the proposed rule would make it more difficult for many banks to serve their customers.

“Extending fiduciary status to any service provider who ‘specifically directs’ an investment-related ‘suggestion’ to a plan fiduciary or retirement investor would capture vast swaths of written and oral communications from banks that are clearly not acting as fiduciary investment advisers,” Cleary said.  “This could include, for example, sales conversations, requests for proposals, discussion of new products and services, discussions of performance data and other communications that should fall well outside the scope of ERISA’s justifiably strict fiduciary responsibility requirements.”

(Source - ABA News Release)  


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