WASHINGTON—The Labor Department should make a priority of repealing its fiduciary rule, NAFCU said in a letter to DoL Secretary Alexander Acosta.
NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt said the association and its members are concerned that the rule casts too wide a net and "unfairly burdens credit union activity with complex requirements and potential litigation risk." Because of these risks, she added, credit unions may decide that it is no longer worthwhile to recommend an investment advisory credit union service organization (CUSO) to a member or to make certain investment recommendations related to rollovers or transfers.
"Credit unions are different than most other types of financial institutions. Since the Great Depression, the credit union industry has defined itself as 'not for profit, not for charity, but for service,' and that shared philosophy has endured to this day," Hunt wrote. "As financial cooperatives directed by volunteer boards, credit unions exist for the primary purpose of serving their membership – not for earning fees on investment brokerage."
Hunt also noted that the fiduciary rule's Best Interest Contract Exemption would disrupt existing relationships with CUSOs by imposing costly due diligence requirements.
"NAFCU believes that there is little merit in requiring credit unions to comply with a complex fiduciary duty requirement when available data does not suggest that the 'conflicts' envisioned by the final rule have ever detracted from credit unions' high standards of member service," Hunt wrote.
In March, NAFCU submitted comments to the Labor Department supporting the 60-day extension of the date of applicability for the rule, which is now June 9. In that letter, the association also urged that the rule be revoked, or at the very least, that credit unions be exempted from its requirements.