DISAPPROVING DEPARTMENT OF LABOR RULE RELATED TO DEFINITION OF THE TERM ``FIDUCIARY''

Mr. SCOTT of Virginia. Mr. Speaker, I rise in opposition to H.J. Res. 88. This Congressional Review Act resolution of disapproval would undo the Department of Labor's final rule that simply ensures financial advisers act in the best interests of their clients with retirement funds.

Now, this is a Department of Labor rule that only applies to workers' retirement funds. In times past, people would retire and receive a defined benefit. They would just retire and get their promised income. But now, we have what are called defined contribution plans, where the money is invested and, over the years, if someone, even a modest-income person, invests over his 40-year career, he could easily amass a fund of hundreds of thousands of dollars, even $1 million if they start early and invest consistently.

So we are talking about people who may not have bought a single share of stock or a bond or mutual fund in their life, who walks into an investment adviser's office with all of the savings that could amount to as much as $1 million.

For far too long, certain financial advisers have been able to exploit loopholes in the decades-old regulation that governs investment advice for retirement savers. Right now, financial advisers can easily steer retirement clients towards financial products that may yield the adviser a big commission but may not be in their clients' best interest. Of course, not every financial adviser does this, but some do.

This unscrupulous practice of providing what is called conflicted advice insidiously erodes workers' retirement nest eggs. According to the White House Council of Economic Advisers, retirement savers lose $17 billion a year as a result of receiving conflicted advice about their retirement savings.

The Department of Labor recognizes the magnitude of this problem, and the department took action to protect workers' retirement savings. All told, they have been working on this issue for nearly 6 years. Over the past year alone, they conducted hundreds of meetings and provided the American public and industry representatives with nearly 6 months to weigh in on their proposal to fix the problem.

Secretary Perez and his colleagues listened to and repeatedly assured industry officials, Members of Congress, and other stakeholders that the final proposal would reflect the input that the department received and that the department would get the rule right. I believe the department did just that. The final rule addresses the legitimate concerns raised by Members of Congress, industry, and other stakeholders without compromising the main goal: ensuring that retirement clients receive investment advice that is in their best interest.

I am not alone in believing this. The broad and diverse coalition of stakeholders, including AARP, AFL-CIO, NAACP, National Council of La Raza, and many others have registered strong support for the rule.

But let's be clear: support for the final rule is not limited to those who represent and advocate for consumers and workers. Initial reactions to the final rule from Merrill Lynch Wealth Management, TIAA, Morgan Stanley, and others in the financial services sector have been positive and encouraging. Other companies appear to be reserving judgment on the rule until they better understand its full implications, and that is understandable.

But House Republicans have not reserved judgment. They have rushed to judgment in their opposition to the final rule. That is unfortunate because the final rule is a responsible solution to a real problem. The rule will help workers enjoy a dignified retirement, and this resolution would reject the rule.

Mr. Speaker, this resolution should be rejected for what it is: an effort to perpetuate an unacceptable status quo that allows some advisers to operate under a business model that puts their interests and their financial interests ahead of their clients' interests. We should protect workers' hard-earned retirement funds and reject this resolution.