DOL Fiduciary Rule Still in Limbo After Latest Court Ruling

The US Department of Labor’s (DOL) Fiduciary Rule has been the subject of much debate, and still remains largely in limbo as it works its way through the court system. The rule, which expands the scope of persons deemed to be a fiduciary, was to go into effect in January 2018, but full implementation was delayed. A panel of our experts, Daniel O'Lear, Yaqub Ahmed, Drew Carrington and Michael Doshier, give the latest update on where things stand today after a key appeals court ruling this month.

Latest Court Rulings

Back in 2010, the US Department of Labor (DOL) proposed to significantly expand the scope of persons deemed to be a fiduciary with a new rule aimed at protecting consumers. The intent of the new “DOL Rule” was to ensure financial advisors put their clients’ interests above their own financial interests. The rule was supposed to be fully implemented on January 1, 2018, but has faced a series of delays and court battles.

On March 15, 2018, the United States Court of Appeals for the Fifth Circuit vacated in its entirety the DOL rule (also called the “conflict of interest rule”) on Chamber of Commerce of the United States of America, et al. v. U.S. Department of Labor, et al., by a 2-1 vote. The decision was based on the arguments by the US Chamber of Commerce, the Financial Services Institute and the Securities Industries and Financial Markets Association (SIFMA) that the DOL had overreached in its authority in creating such a rule.

The impact of the future of the rule is still unclear, especially given only days earlier (March 13), the Tenth Circuit ruled against Market Synergy Group, which recently lost two lawsuits in the US District Court arguing against the expanded fiduciary definition. Unlike the Fifth Circuit ruling that related to the entirety of the rule, though, the Tenth Circuit ruling was much narrower in scope.