One of the agencies under fire is the Consumer Financial Protection Bureau (CFPB) whose authority includes governing against predatory lending practices and abusive debt collection. The Trump administration seeks to roll back these regulations and the influence of agencies such as the CFPB, citing that they are too expensive to enforce and that the US financial system needs to be competitive with other countries. Lisa Donner, executive director of Americans for Financial Reform, thinks otherwise. She states, “It would be ending the kind of enforcement approach that has put 11.8 billion back in consumers’ pockets.” This executive order makes no immediate changes, but requires the heads of regulatory agencies to come up with suggestions to alter financial regulation to make it “efficient” and “foster economic growth.”
The other executive order President Trump signed on Friday took aim at slowing down the implementation of the “fiduciary duty” rule written by the Department of Labor and finalized in June of last year. This rule is slated to go into effect on April 10 of this year and would impose stricter regulations on financial advisors when they are investing for a client’s retirement. In the past, investment advisors were able to choose funds for their clients that were “suitable” to meet their retirement goals, but not necessarily giving them the best investment opportunity for their money. This allowed advisors to pick funds that fell in the “suitable” category, but also pick ones that paid large commissions, sometimes at the expense of a lower return. Trump has ordered the Labor Department to stop the process of implementing the rule and has called for a complete review of three areas:
- Whether the rule may harm investors due to reduced options for retirement accounts
- If the rule will cause a change in the retirement advice industry “that may adversely affect investors or retirees”
- Whether the rule will cause an increase in litigation with clients who believe their advisor is not acting in their best interest, driving up the prices that retirees or investors may have to pay for access to retirement services.