BICE and Related Exemptions: Limiting Providers’ Liability Until Full Implementation

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The U.S. Department of Labor (DOL) in August proposed to extend the transition period by 18 months (in other words, from January 1, 2018, to July 1, 2019) for the full implementation of the Best Interest Contract Exemption (BICE), the Principal Transactions Exemption (PTE), and PTE 84-24 (relating to sales of annuities and other transactions involving insurance companies and agents).retirement

The proposal, published in the Federal Register on August 31, was followed by a 15-day comment period. We think it is highly likely that the DOL will finalize the proposal (although changes to the proposal are possible).

What Do I Do Now?

In this uncertain environment, a critical and bottom-line question for financial advisers and financial institutions serving employer-sponsored retirement plans is, “What do I do during the transition period”?

The DOL stated that the Impartial Conduct Standards currently in effect will continue to be the sole conditions for the exemptions during the extended transition period (in other words, the period in which the exemption is available but compliance with the full conditions of the exemption is not necessary).

Briefly, as reported, the Impartial Conduct Standards require that the financial institution and its advisers: (1) act prudently and in the best interest of the retirement investor

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