A House pensions subcommittee heard testimony on the Labor Department rules adopted under the Bush administration - which President Barack Obama put on hold for further review.
Supporters say the complex rules have adequate safeguards to protect the consumer from biased advice given by advisers who have a financial incentive to recommend certain investment products. But some Democrats contend they could allow financial advisers to steer clients to investment products that maximize the advisers' profits rather than workers' retirement security.
"If workers receive investment advice, it should be independent and free of conflicts of interest," said Rep. Rob Andrews, D-N.J., chairman of the House Subcommittee on Health, Education, Labor and Pensions, which conducted the hearing. "This last-minute Bush administration special interest payback had the potential to further drain Americans' hard-earned retirement savings."
Andrews said the rules as written will tip the scales toward special interests by opening the door to conflicts of interest among the very advisers purporting to offer unbiased investment advice. "I applaud the Obama administration putting this regulation on hold and hope this flawed rule does not see the light of day," Andrews said.
Rep. John Kline, R-Minn., disputed claims that the rules were "last-minute, midnight" regulations that provide giveaways to the financial services community. He said the rules have been the subject of months of debate and consideration. "As testimony will reflect, many of the policy choices made by the department are decidedly pro-participant and protective in scope," he said.
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