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NAFCU fully supports the 60-day delay in implementation of the Labor Department's fiduciary duty rule and on Friday urged the department to revoke the rule or, at the very least, exempt credit unions.

NAFCU Regulatory Affairs Counsel Andrew Morris, in an official comment letter, said that the Labor Department's final rule defining who is a fiduciary of an employee benefit plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code should be rescinded because its complex requirements would discourage investment recommendations and restrict consumer choice.

The Labor Department recently announced a proposed 60-day delay of its fiduciary rule implementation date to June 9.

"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," Morris 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."

Morris pointed out that the NCUA has traditionally stated that federal credit unions "may not act as brokers-dealers in securities or provide investment advice of the type that would render them 'investment advisers.'" While the Labor Department's rule covers these types of activities, it is also covers other transactions and relationships that "unfairly burden credit union activity with complex requirements and potential litigation risk."

As a result, he wrote, credit unions may decide that it is no longer worthwhile to recommend an investment advisory credit union service organization to a member or to make certain investment recommendations related to rollovers or transfers.

He added that the fiduciary rule's Best Interest Contract Exemption would impose a costly burden on credit unions since they would need to adopt anti-conflict policies before engaging in certain advisory activity.

"NAFCU believes that there is little merit in requiring credit unions to comply with a complex fiduciary duty requirement when there is minimal, if any, data indicating that potential conflicts of interest have negatively impacted credit union member service," he concluded.