Bill to Block Fiduciary Rule Passes Out of Committee

[DHK]

Email from Americans for Annuity Protection:

Senate Passes Vote to Block DOL Rule!

H.J.Res. 88, the Congressional Review Act resolution of disapproval to block the DOL fiduciary rule just passed 56-41.
Absent GOP (1): Cruz
Absent Dem (2): Carper, Sanders
Democrat “Yes” votes (3):
1. Donnelly
2. Heitkamp
3. Tester

Dammit Cruz! You're not running for President anymore and now your AWOL in the senate?!

And you'd think that with how much Sanders hates Wall Street that he'd be there to make sure this bill passed... lol.

 

[Brian Anderson]

NAFA had orchestrated a campaign urging members to call their Senators and vote for this resolution while NAIFA members - timing a little unfortunate - were scheduled to be visiting lawmakers on Capitol Hill today and also urging support for this.

Of course Obama will just veto it anyway...

Insurance Forums | Fighting the DOL final rule: NAFA calls for support of S.J. RES. 33; NAIFA members on Capitol Hill Wednesday

 

[DHK]

Lawsuit filed!

Lawsuit Filed to Challenge New Department of Labor Rule That Prevents Financial Professionals from Best Serving Retirement Savers - Financial Services Roundtable

 

[Brian Anderson]

NAFA also filed a challenge today... this from the email they just sent out:

WASHINGTON (June 2, 2016) — NAFA, the National Association for Fixed Annuities, announced today that it has filed a federal lawsuit in the D.C. District Court challenging the Department of Labor’s new “fiduciary” rule. The lawsuit seeks a preliminary injunction to stay the rule, which is currently scheduled to become operational in April 2017.

“NAFA believes this action is necessary, not only to defend the interests of our members, but to protect consumers against excessive government regulation that will only hurt average working Americans trying to save for retirement,” said Chip Anderson, Executive Director of NAFA.

The lawsuit alleges the DOL rule is invalid on grounds that the agency exceeded its authority to regulate IRAs and that it improperly categorizes insurance agents as fiduciaries.

The lawsuit further alleges that the rule creates a private right of action, which only Congress can do. The suit further alleges that DOL’s decision to include fixed indexed annuities (FIAs) under the Best Interest Contract Exemption (BICE) in the final rule – rather than under the less onerous PTE 84-24 as originally proposed – with no opportunity for meaningful comment and without adequate justification was arbitrary and capricious. As fixed insurance products and not securities, FIAs and those who create, distribute and sell them stand to be uniquely harmed by this rule.

“The inherent problems with this rule are vast and far-reaching,” said Anderson. “This rule is administratively unworkable, especially for the fixed annuity industry, and that means quality products and advice currently available to middle-income Americans will be harder to access and more expensive” added Anderson. The brief filed with the lawsuit contends the new rules are unworkable for insurance companies, independent marketing organizations, and individual agents, largely because the DOL rule and exemptions are designed for the securities industry.

“Our organization strongly supports consumer protection but this rule exceeds DOL’s rulemaking authority and will result in lost jobs in our industry, less choice for consumers, and more lawsuits to line the pockets of class action lawyers. We will do whatever we can to help policymakers create real solutions, but this rule will do more harm than good, and we will challenge it in the courts,” said Anderson.

 

[DHK]

Insurance groups ACLI and NAIFA sue DOL over fiduciary rule's impact on annuities

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https://www.linkedin.com/pulse/inte...-fred-reish?trk=hp-feed-article-title-comment

This is my seventh article about interesting observations “hidden” in the fiduciary regulation and the exemptions.

There are three parts to the best interest standard . . .

The prudent person rule.
Individualization to the retirement investor’s circumstances.

The duty of loyalty.
See the three parts below. Interestingly, none of the parts uses the word “best.” In other words, “best interest” is just a label; the real requirements are prudence and loyalty.

Prudence: “. . . the fiduciary acts with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, . . .”

Individualization: “. . . based on the investment objectives, risk tolerance, financial circumstances, and needs of the retirement investor, . . .”

Loyalty: “. . . without regard to the financial or other interests of the Adviser, Financial Institution or any Affiliate, Related Entity, or other party.”

Moral of the story: Don’t let the label confuse you. There isn’t any requirement to pick the best investment . . . if such a thing exists. It’s just old-fashioned prudence and loyalty. The result is that investment advice to IRAs will often look like investment advice to 401(k) participants: good quality investments, appropriate asset allocation and diversification, and reasonable costs.

 

[walthamny]

I think these lawsuits won't accomplish anything other than perhaps delay the start of the rule. If Hillary wins, she will appoint judges to the Supreme Court who will uphold the DOL. So whatever ruling they get in lower courts, it would not matter in the long run. Now if Trump wins, these lawsuits will have no value as he will try to get rid off tax exempt status of life insurance. The industry will fight that and they wont have much energy left to focus on this.