Amnesty and the Fee Disclosure Regulations
I like this piece here on the question of whether investment and financial advisors who foul up their initial efforts to comply with the fee disclosure regulations should be given a mulligan, and allowed to effectively self-report and correct without penalty. The proposal is to have the Department of Labor essentially run yet another type of voluntary correction procedure, which would then insulate advisors who have erred in complying with the new rules. While I am not in favor of a complete free pass for mistakes, certainly the middle ground on the idea staked out by one commentator, Craig Watanabe of California’s Penniall & Associates, who favors amnesty for honest mistakes but not for those that rise (or – I guess more accurately – fall) to the level of negligence, has merit.. Why? Because its not the easiest thing to implement and comply with a new regulatory regime of this nature, and it seems fair to allow the regulated a chance to fix early, honest mistakes that occur in trying to properly comply; the same can’t be said for efforts to comply that are so lax, so without real intent to satisfy the new rules, and so poorly executed that they should be deemed negligent. I would also note that, since the justification given for the idea is the difficulty of early compliance, that the amnesty program, if created, ought to vanish after a year or so. If someone cannot get it right by then, they shouldn’t be trusted with all of the other complexities involved in handling and protecting workers’ retirements.