Are You Ready to Comply With the DOL Fiduciary Duty Rule If It Goes Into Effect on April 10? (Part II: The BICE)

We are now five weeks from the still-current April 10 implementation date of United States Department of Labor’s (DOL) Fiduciary Duty Rule.

Yes, a delay still seems very likely. On March 1, the DOL issued a proposed rule that would delay the implementation date 60 days, to June 9. There is a 15-day comment period on the proposed delay. Then, the Office of Management and Budget (OMB) still has to approve the delay.

Until that happens, the April 10 implementation date controls. Will you be ready? For that matter, will you be ready if the Rule goes into effect on June 9?

Last week, we discussed preparing your commission grids, and working to make sure they comply with the Fiduciary Duty Rule. (That post is here.)

This week, we turn to the Best Interest Contract Exemption (the BICE).

While full compliance with the BICE is not required until January 1, 2018, there are some important requirements that take effect on April 10. During the “transition period” (the period between April 10, 2017 and January 1, 2018), firms are required to do the following under the BICE:

  • Comply with the “Impartial Conduct Standards.” The Impartial Conduct Standards require firms and advisers to: (i) give advice that is in the best interest of the retirement investor; (ii) charge no more than reasonable compensation; and (iii) make no misleading statements about investment transactions, compensation, and conflicts of interest.
  • Provide a written notice to retirement investors that: (i) acknowledges their fiduciary status; (ii) states that the firm and its advisers will comply with the Impartial Conduct Standards and disclose material conflicts of interests; and (iii) makes certain disclosures regarding the firm’s recommendations of proprietary products or investments that generate third party payments.
  • Designate a person or persons responsible for addressing material conflicts of interest and monitoring advisers’ adherence to the Impartial Conduct Standards.
  • Comply with the recordkeeping requirements of Section V(b) and (c) of the BICE.

As you can see from the above, any firm that believes it can wait until January 1, 2018 to worry about compliance with the BICE does so at its peril.

About Julie Firestone

Julie Firestone is a member of Briggs and Morgan's Business Litigation Section and the Financial Markets Group. Julie practices primarily in the following areas: complex commercial disputes and class actions; securities litigation and arbitration; SEC and FINRA regulatory investigation and enforcement; and shareholder and partnership disputes. Julie represents corporations, investment firms, broker-dealers, insurance companies, issuers of securities, registered representatives and insurance agents in class actions, regulatory proceedings and other adversary matters. She also focuses on customer complaints and regulatory compliance, as well as customer disputes in arbitration. Julie’s legal experience includes matters involving securities fraud, breach of contract, common law fraud, RICO, breach of fiduciary duty, suitability, selling away and unauthorized trading.
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One Response to Are You Ready to Comply With the DOL Fiduciary Duty Rule If It Goes Into Effect on April 10? (Part II: The BICE)

  1. Pingback: Are You Ready to Comply With the DOL Fiduciary Duty Rule If It Goes Into Effect on April 10? (Part III: Your E&O Policy) | Financial Markets Law

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