Hurry up and kill the DOL fiduciary rule already, insurance groups tell 5th Circuit

ACLI, NAIFA say delay in issuing mandate causing 'palpable uncertainty' for industry

Jun 6, 2018 @ 3:21 pm

By Mark Schoeff Jr.

Two insurance industry trade associations asked a federal court Wednesday to hurry up and kill the Labor Department's fiduciary duty rule.

In a letter to the 5th U.S. Circuit Court of Appeals, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors said the court's delay in issuing the mandate that makes effective its March 15 decision to vacate the rule is causing compliance headaches.

The court was supposed release the mandate on May 7, but has not yet done so. Until it does, the partially implemented DOL rule is still in operation, and the agency is following a temporary enforcement policy.

"Those factors create palpable uncertainty for significant portions of the insurance and financial services industries — uncertainty that interferes with long-term planning, that risks generating consumer confusion, and that imposes ongoing compliance costs on regulated entities," wrote David W. Ogden, counsel for ACLI and NAIFA, in a letter to the 5th Circuit clerk. "Appellants therefore respectfully request that this Court issue the appellate mandate as expeditiously as possible, consistent with the Court's internal processes."

The ACLI and NAIFA are two of the plaintiffs in an industry lawsuit against the DOL rule. A split decision of a three-judge panel of the court found that the DOL exceeded its authority in promulgating the regulation.

Supporters of the regulation assert that it mitigates broker conflicts of interest that lead to the purchase of inappropriate high-fee investment products that erode retirement savings.

In May, the 5th Circuit denied motions from AARP and three states to intervene as defendants in the case when the Department of Justice, acting on behalf of DOL, did not appeal the March 15 5th Circuit decision.

Late last week, the court clerk gave no indication of when the March 15 decision would become effective, only saying that it is "still pending."

The parts of the rule that were implemented a year ago — impartial conduct standards for brokers when working with clients in retirement accounts — are still in effect until the 5th Circuit ruling becomes effective.

In the meantime, the DOL has reiterated its temporary non-enforcement policy, allowing brokers to use exemptions in the regulation without a contract as long as they make a good-faith effort to comply with the impartial conduct standards, such as acting in a client's best interests, charging reasonable fees and not making any misleading statements.

While the DOL rule wanes, the Securities and Exchange Commission has released an investment advice reform proposal that would require brokers to act in the best interests of clients. The comment deadline is Aug. 7.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

What's behind the TCA, ETrade deal?

Deputy editor Bob Hordt talks with senior columnist Jeff Benjamin about what each party in the recent acquisition stands to gain by joining forces.

Latest news & opinion

What's in a name? For TCA by ETrade, everything

Trust Company of America is gone, and there's big buzz over the name change. But turning the custodian into an industry powerhouse will take a lot longer — if it happens at all.

As Ameriprise case shows, firms on hook when brokers go bad ​

The SEC will collect $4.5 million from the brokerage firm for failing to supervise brokers who were ripping off clients.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Ameriprise to pay $4.5 million to settle SEC charges that five reps stole more than $1 million from clients

Agency censures firm for not protecting clients from thieving brokers.

SEC slaps Lockwood with $200,000 fine over unseen trading costs to clients

Clients were forced to pay fees in addition to the usual wrap charges, the regulator maintains.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print