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Dale Brown, President & CEO of FSI

Regulation and Compliance > Federal Regulation

FSI Chief Vows to Keep Fighting DOL Indie Contractor Rule

By Melanie Waddell

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The Labor Department’s new independent contractor rule “is a big step backwards,” and remains “a major issue” for the Financial Services Institute, Dale Brown, president and CEO of FSI, said Tuesday. “We have engaged that fight and it will continue.”

During a media call from FSI’s annual OneVoice conference in Palm Desert, California, Brown said Labor’s new independent contractor rule shows DOL doesn’t “understand the independent advisor model and gig economy workers — these are professionals that own their own businesses, own their own practices. They chose to be independent.”

FSI is also bracing for Labor to release a new fiduciary rule this year.

Robin Traxler, FSI’s deputy general counsel, added on the call that FSI will also continue to monitor states that may push ahead with their own versions of independent contractor rules, “including any states that dropped that effort last year but could resurrect it in 2023.”

Minnesota and New York had proposals that weren’t acted upon last year.

FSI “will strongly resist” a new fiduciary rule “if we find that it is as unworkable as the 2016 rule,” Traxler said.

David Bellaire, FSI’s general counsel, added on the call that FSI’s stance regarding Labor’s independent contractor rule is that it “should be withdrawn.”

The DOL released on Oct. 11 a proposed rule that would replace the existing 2021 test under the Fair Labor Standards Act used to determine worker classification as either an independent contractor or an employee.

The rule, if finalized, would cause “independent financial advisors and firms to divert time and resources to defending their independent contractor classification,” FSI said at the time.

Labor’s regulatory flexibility agenda states that the department plans to issue a final independent contractor rule in May. Bellaire told ThinkAdvisor via email Monday that Labor’s deadline is “unrealistic.”

FSI also announced Tuesday at the event that the group has partnered with fintech firm Broadridge Financial Solutions Inc. on a new, free-to-use Form CRS Video Guide for FSI member firms.

The guide, according to FSI, includes “three easily understandable, 90-second videos” designed to “help investors and clients better understand what Regulation Best Interest’s Form CRS contains and to facilitate more meaningful conversations between them and their financial advisors.”

Brown said that “during the last few years, we have witnessed the most sweeping changes to the financial services compliance landscape in decades, including the introduction of Form CRS.”

FSI members, Brown continued, “take their responsibilities in this area seriously and are committed to finding new and innovative ways to facilitate constructive dialogue between advisors and clients.”

Melanie Waddell

@Think_MelanieW

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