FACC sincerely hopes the DOL will reflect in earnest over our concerns about this ill-conceived package of rules and exemptions even though DOL and FACC are engaged in ongoing litigation relating to prior DOL pronouncements. FACC is driven primarily by its commitment to a strong marketplace in which independent agents can function effectively in delivering quality fixed annuity and insurance products to clients who, in turn, want choices for protecting their assets and achieving a secure retirement. It is FACC’s hope that the DOL will reconsider and withdraw its proposed rulemaking, which will otherwise merely serve to unleash a new round of litigation and confusion for retirement savers at a time when those energies could be spent more productively working towards better education of consumers, improving coordination among regulators, and strengthening laws that govern America’s retirement system.
FACC believes the DOL is trying to turn 50 years of ERISA history upside down – which we think is wrong – both legally and as a matter of public policy. Putting aside the legal issues for a moment – those will have their day if this proposal goes forward – we believe the DOL has created a “false narrative” – for lack of a better phrase – suggesting there is a need to bring Title I regulation for employer plans to IRAs sold to individual consumers covered by Title II.
For reasons explained herein, FACC must strongly oppose the proposal to amend Nevada’s suitability regulation as presently drafted. While we are pleased Nevada is seeking to update its regulations, FACC is extremely troubled by the extensive deviations from the NAIC model regulation found in this proposal, which will have adverse consequences for industry and the public, both foreseeable obstacles and unintended consequences. We urge the Department to withdraw this proposal and instead adopt the NAIC model regulation updates.
The Proposed Rule proves an important point, i.e., the DOL’s goal has remained unchanged over the past 15 years of rulemaking. While the DOL will likely insist that the Proposed Rule is different from the New Interpretation because the DOL is repealing the five-part test, that is an immaterial distinction. In fact, the Proposed
It is hard to state forcefully enough how the Department’s proposals reflect a complete lack of deference to the Chamber of Commerce opinion. The Department seems to believe it is unencumbered by the Fifth Circuit decision, which it tries to reduce to mere criticism of the Best Interest Contract (BIC) Exemption. In
FACC at the same time is strongly objecting to DOL’s new rule proposal as inherently incompatible with ERISA as spelled out by the Fifth Circuit decision. “FACC will have no choice but to ask the courts yet again to intervene if the DOL dares to move forward with this proposal
In this regard, by now proposing to overhaul PTE 84-24, the DOL sabotages the assurances in its briefing that the New Interpretation had preserved that exemption for insurance agents who would be swept into its far broader reading of the five-part test. Similarly, the DOL has argued that the major question doctrine should not apply because the expansion of fiduciary responsibility under ERISA did not have far-reaching economic impact or involve a matter of political significance. The contents of the new proposal, introduced with fanfare by the President himself, demonstrate otherwise.
…it is offensive that the DOL tries to characterize commissions and other financial components within annuities as “junk fees”. That is a term never before applied to annuities and amounts to a slanderous characterization of the compensation paid to hardworking insurance agents. To our knowledge, all annuity fees charged to clients are routinely and prominently disclosed as required by state insurance law. We hope industry will join FACC in pushing back hard against this cynical propaganda ploy in order to protect the reputation of our products and agents.
FACC has previously provided comments to the Department and commends its initiative in proposing regulations that align with the NAIC Model Regulation on Suitability in Annuity Transactions. We wish to express our continuing gratitude to you and others at the Department for moving forward with these regulations.
[T]he DOL continues to ignore or twist what the New Interpretation says and what the Fifth Circuit held in Chamber of Commerce. . . . Having convinced the Magistrate Judge to accept the premise that it hasn’t really reinterpreted the five-part test in any meaningful way, the DOL now hopes the Court will not look too closely under the hood but instead simply adopt the Magistrate Judge’s erroneous Recommendations. The Court cannot do so, however, without running afoul of the Fifth Circuit’s unequivocal holdings on the proper interpretation of ERISA and the five-part test.