The House of Representatives passed the Retail Investor Protection Act Tuesday night, widely seen as an alternative to the fiduciary-only rule being pushed by the Obama administration.
A bill proposed by Rep. Ann Wagner, R-Mo., passed 245-186 and would prohibit the Labor Department from instituting new rules governing financial services before the Securities and Exchange Commission (SEC) reviews the proposed regulations.
Wagner called the vote a win for low- and middle-income investors: "The Obama Administration and the Department of Labor believe that the American people need to be protected from themselves, that they are not smart or capable enough to control their own retirement savings.”
A similar measure was passed by House in 2013, but died in the Senate for lack of action. The RIPA legislation again faces an uphill climb in the upper chamber, and if it passed there, President Barack Obama reiterated Tuesday that he would veto the bill.
“The administration is committed to ensuring that American workers and retirees are able to receive advice about how to invest their money in safe, secure, and transparent financial products that is free from harmful conflicts of interest,” the White House said in a statement today.
The DOL is finalizing its fiduciary only rule, which is expected to be released in the spring. Any delays hamper the DOL’s chances of getting a rule done in time. The Obama administration has said it wants the rule in place before the president leaves office in January 2017.
Opponents of the DOL rule say it endangers small savers and will make it harder for them to get access to sound retirement advice. In addition, they say the rule will force costly compliance mandates on anyone who deals with retirement accounts.
“We believe today’s vote shows the deep concern with the Department of Labor’s fiduciary rule proposal," said Cathy Weatherford, president and CEO of the Insured Retirement Institute. "Members of Congress in both chambers, on a bipartisan basis, have written letters to the DOL expressing concern that the proposal will restrict retirement savers’ access to retirement planning advice and limit their choice on retirement products."