The new fiduciary standard is set to begin on June 9. Are you ready?

On Tuesday, April 4, 2017, the Department of Labor finalized a delay to the applicability date of the Fiduciary Rule until June 9, 2017

Introduction

Following President Trump’s February 3, 2017 memorandum (the “Presidential Memorandum”)1 directing the Department of Labor (DOL) to prepare an “updated economic and legal analysis concerning the likely impact” of its “Conflict of Interest Rule” on fiduciary investment advice (the “Rule”) and related prohibited transaction exemptions (PTEs), the DOL finalized a delay to the initial applicability date of the Rule until June 9, 2017.2

The DOL also delayed the initial applicability date of the Best Interest Contract (BIC) Exemption, the Class Exemption for Principal Transactions, and amendments to other previously granted exemptions until June 9, 2017.  The applicability date of the Impartial Conduct Standards in these exemptions is extended until June 9, 2017, while compliance with other conditions for transactions covered by these exemptions (e.g., specific disclosures and representations of fiduciary compliance in written communications with investors) is not required until January 1, 2018.3

In addition, the DOL delayed the initial applicability of amendments to PTE 84-24 for certain insurance companies and agents until January 1, 2018 (other than the Impartial Conduct Standards, which will be applicable on June 9, 2017).

The DOL argued that these extensions are necessary to enable it to examine whether the Rule may adversely affect the ability of Americans to gain access to retirement information and financial advice, and to prepare the updated economic and legal analysis pursuant to the Presidential Memorandum.  The extensions will also allow the DOL to “consider possible changes with respect to the Rule and PTEs based on new evidence or analysis developed pursuant to the examination.”4

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Department of Labor issues proposal to delay Fiduciary Rule

On Thursday, March 2, 2017, the Department of Labor published a proposal that would delay the Fiduciary Rule by 60 days; comments will be accepted until March 17, 2017

Introduction

On February 3, 2017, President Donald J. Trump issued a memorandum (the “Presidential Memorandum”) directing the Department of Labor (DOL) to examine its “Conflict of Interest Rule” on fiduciary investment advice (the “Rule”) and related prohibited transaction exemptions (PTEs) to “determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.”1 The Presidential Memorandum also raised concerns that the Rule “may not be consistent with the policies of [the] Administration.”

The Presidential Memorandum did not directly delay or order a delay in the Rule’s initial April 10, 2017 applicability date, but directed the DOL to prepare an “updated economic and legal analysis concerning the likely impact” of the Rule.

If the DOL makes an affirmative determination pursuant to these considerations or if it concludes for any other reason that the Rule is inconsistent with the priorities outlined in the Presidential Memorandum, it is directed to publish a proposed rule to rescind or revise the Rule, as appropriate and consistent with law.

On March 2, 2017, the DOL published in the Federal Register a proposed rule that would extend the applicability date of the Rule and PTEs for 60 days (i.e., until June 9, 2017) to allow the DOL to “address questions of law and policy.”2

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Compliance to power performance

As demands on the compliance function continue to increase in an era of enhanced regulatory scrutiny, data from the 2016 Deloitte Insurance Ethics and Compliance Survey demonstrate a correlation between financial performance metrics and the maturity levels of insurance and ethics programs.

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New York State proposes new cybersecurity regulation for financial institutions

As federal regulators continue to update existing cybersecurity guidance1 and consider new rules governing banks’ cybersecurity practices,2 the New York State Department of Financial Services (DFS), under the direction of Governor Andrew Cuomo, proposed to establish cybersecurity requirements that go beyond those at the federal level.

On September 13, 2016, the DFS issued a proposal3 that would require banks, insurance companies, and other DFS-regulated entities to establish a cybersecurity program and comply with related requirements. Although these institutions are already subject to cybersecurity requirements at both the federal and state levels, the proposal, which the DFS describes as a “first-in-the-nation” regulation, would establish a more prescriptive framework than any existing regulation.

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The end game draws closer for new insurance capital regimes

Posted by Andrew Mais, senior manager, Deloitte Services LP, on June 28, 2016

Who is Leon Lett? He is the football player who almost got the record for the longest fumble return in Super Bowl history – 64 yards. But Lett started celebrating just before reaching the end zone, Don Beebe knocked the ball out of his hand and the play ended as a fumble, not a touchdown.

After an unexpected and spectacular play, there may be an all too human tendency to start celebrating before crossing the goal line. Some US insurers have watched with concern over the years as it seemed international supervisors were about to impose non-US influenced supervisory regimes on their operations. Now they may feel like the beneficiary of a Hail Mary pass after the Federal Reserve’s (Fed) recent issuance of its Advance Notice of Proposed Rulemaking on capital standards for insurance systemically important financial institutions (SIFIs) and for the other insurers it supervises, those with savings and loan holding companies (SLHCs).

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Across industries, 2016 shapes up as a year of regulatory transformation

Posted by Christopher Spoth, Executive Director, Deloitte Center for Regulatory Strategies, on February 19, 2016

Each year, the Deloitte Center for Regulatory Strategies publishes a series of outlooks on what the coming year may bring. Each one focuses on regulatory challenges that are unique to a particular industry. But perhaps the greatest lessons I find in them are the challenges that aren’t unique—the priorities that will likely shape the next 12 months for business leaders everywhere.

What do I see in 2016? A year of transformation. New tools are changing the ways regulators define their jobs. Organizations that recognize the changes have an opportunity to apply several lessons to their regulatory strategies:

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Top regulatory trends for 2016 in Insurance

The regulatory landscape for insurance has grown vastly more complex in the aftermath of the global financial downturn, and it will continue to present significant challenges in 2016. To help decision-makers understand the major changes that are taking place, Deloitte recently published a report that examines the key regulatory trends for insurers in 2016.

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The next frontier in managing risks


bridges

Disruptive innovations can arrive at any time, from any direction. They have the potential to unravel the assumptions that make your business viable. But for the companies that keep an eye on the horizon, disruptions also carry the seeds of opportunity.

Instead of fearing the next disruption, what if you were poised to exploit it? The telephone, the computer, overnight delivery – in each case, someone was first to embrace the implications. What is the “next next” thing, and how will you respond?

In a new column for Best’s Review, Deloitte LLP Global Insurance Regulatory Leader Howard Mills defines a new evolution in the race against risk.
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