A Department of Labor (DOL) proposed rule that would redefine who is an investment advice fiduciary as part of the Employee Retirement Income Security Act was the focus of a congressional hearing Wednesday. America’s Credit Unions President/CEO Jim Nussle wrote to the House Financial Services Subcommittee on Financial Services and Capital Markets ahead of its hearing on the proposed rule.
Nussle expressed concerns about how the proposal “casts a wide net that unfairly burdens credit union activity with complex requirements and potential litigation risk.” He noted that the term “recommendation” is too broad and could include “general advice and explanation of investment-related financial products, such as IRAs, provided by credit union employees.”
“In light of such possible interpretations, credit unions may decide that it is no longer worthwhile to recommend an investment advisory credit union service organization (CUSO) to a member to either set up an IRA or create an employee welfare benefit plan (if the member is a business),” wrote Nussle. “This is concerning since credit unions and credit unions employees have long provided financial products, services, and support to their members.”
Subcommittee members from both parties noted the proposal was a regulatory burden throughout the hearing, one that could prevent millions of consumers from receiving services.
America’s Credit Unions will engage lawmakers on credit union priorities to ensure the industry and its nearly 140 million members thrive.