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Lawmakers propose legislation to take on Labor Department's fiduciary rule

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Lawmakers propose legislation to take on Labor Department's fiduciary rule

Republican members of Congress are trying to fight back against the Department of Labor's Conflict of Interest Rule, which began its rollout June 9.

While the Labor Department and the Securities and Exchange Commission are evaluating possible changes to the fiduciary rule, lawmakers in both the U.S. Senate and the U.S. House of Representatives have introduced legislation that would repeal it altogether.

Among those efforts is the Financial CHOICE Act, which was passed by a vote of 233-186 in the U.S. House of Representatives on June 8. The bill was proposed by House Financial Services Committee Chair Rep. Jeb Hensarling, R-Texas, and has been marketed as a sweeping deregulatory effort to repeal several Wall Street reform measures from the 2010 Dodd-Frank Act, including the Labor Department's fiduciary rule.

The fiduciary rule, which has been hotly contested by several key industry players, mandates that advisers selling investment and particular retirement insurance products, including variable annuities, act in the best interest of their clients. Many expected a further delay of the rule, but in late May, Labor Secretary Alexander Acosta claimed there was "no principled legal basis" to justify such a postponement.

On June 7, Rep. Phil Roe, R-Tenn., and Rep. Peter Roskam, R-Ill., proposed legislation, titled the Affordable Retirement Advice for Savers Act, that would also repeal the Labor Department's fiduciary rule.

"Our nation faces difficult challenges when it comes to retirement security, and the American people deserve real solutions," Roe said in a statement. "This legislation reflects a more responsible solution that will ensure all Americans have access to affordable retirement advice that's in their best interest."

A day prior to the fiduciary rule's implementation, U.S. Sen. Johnny Isakson, R-Ga., reintroduced legislation in the upper chamber of Congress to block the fiduciary rule as well.

Known as the Affordable Retirement Advice Protection Act, Isakson's legislation "would preserve access to quality financial planning and ensure that retirement advisers serve the best interests of low- and middle-income Americans," according to a statement from the senator's office.

"I will continue to fight the fiduciary rule because it is an obstacle to the American dream," he said in a statement. "This big-government regulation prices the advice of knowledgeable professionals out of reach for hard-working taxpayers in middle- and lower-income families."

The Act would effectively provide an alternative to the fiduciary rule by raising standards for the retirement industry, penalizing financial advisers and others who violate their clients' trust, mandating clear communication of information from advisers to investors, and validating that any advice or investment options given to investors or individuals seeking retirement savings guidance are best suited for their individual needs.

Fellow U.S. Sens. Lamar Alexander, R-Tenn.; Mike Enzi, R-Wyo.; Orrin Hatch, R-Utah; Pat Roberts, R-Kan.; Tim Scott, R-S.C.; and Todd Young, R-Ind., all joined as co-sponsors for Isakson's legislation.