By Chris Adams

A hotly contested rule developed by the U.S. Department of Labor would substantially change the way the financial industry interacts with its customers, a move an advocate says is long overdue.

“The stakes couldn’t be higher,” said Micah Hauptman, financial services counsel for the Consumer Federation of America. He told fellows at the National Press Foundation that consumers have little understanding of the complicated financial products they buy – and that the people selling the products often keep consumers in the dark.

For evidence how little consumers know, take this test, which is part of the National Financial Capability Study (don’t worry if you don’t do well – the average score nationwide is only 60 percent.) He also referred journalists to a literature review conducted by the Library of Congress that assessed overall financial literacy trends.

The rule from the Department of Labor was spurred by evidence such at that detailed in this report from U.S. Sen. Elizabeth Warren, D-Mass., which shows how financial advisors often don’t act in their clients’ financial best interests. At its core, the rule would require financial advisors and planners to follow a standard that says they are acting in their clients’ best interest – that they are giving the best advice, not just suitable advice. The proposed rule applies to retirement accounts.

The financial services industry is opposed to the rule, and in the spring of 2016 filed five legal challenges to stop it. The industry generally says the Department of Labor doesn’t have the authority to impose the rule and that it did so improperly.

Hauptman said that the rule is scheduled to be implemented beginning in April 2017, with the entire rule going into effect in January 2018. If a court grants a preliminary injunction – which hasn't happened yet – that could stop the rule from being implemented.

Hauptman (who supports the rule) gave a detailed presentation of the rule, the reasons for it, the specific legal challenges to it, and the prospects for it eventually being finalized.