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FACC DOL Update – New DOL Rule Proposal

…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.

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Indiana Comment Letter

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.

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FACC Final Brief in DOL Lawsuit

[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. 

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FACC Final Comment to Utah

The NAIC model and many other states permit insurance companies and producers to utilize producer disclosures that are “substantially similar to NAIC Appendices A, B, and C.” Many insurers and producers are already using those disclosure forms in other states and it would help insurance companies and producers if Utah conformed to the NAIC model language. Specifically, we ask that the Rule be modified to say “the producer shall prominently disclose to the consumer on a form substantially similar to the 2020 NAIC Model #275 Suitability in Annuity Transactions Appendix A”. Parallel wording could be used for the other appendices as well. As you can appreciate, this is important to enable insurance companies and producers to utilize the same forms across all jurisdictions that have adopted the NAIC model.

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New Hampshire Comment Letter

The NAIC model and many other states permit insurance companies and producers to utilize producer disclosures that are “substantially similar to” NAIC Appendices A, B, and C. Many insurers and producers are already using those disclosure forms in other states and it would help insurance companies and producers if New Hampshire conformed to the NAIC model language.

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FACC Objections & Brief in Support of Objections

Importantly, vacatur of the scope recommended by the Magistrate Judge frustrates the DOL’s express purpose in adopting the New Interpretation, which set forth the DOL’s “final interpretation of when advice to roll over [Title I] Plan assets to an IRA will be considered fiduciary investment advice under Title I and the Code” (AR 1), and will significantly limit the effect of the New Interpretation. It does not, however, go far enough. Plaintiffs raised multiple other grounds on which the New Interpretation is fatally inconsistent with ERISA and the five-part test. Allowing the remainder of the New Interpretation to survive would leave in place significant and unjustified burdens on the Plaintiffs and similarly situated parties, who would still be at risk of being considered fiduciaries under ERISA or the Code where they never were before and never would be under the common law meaning of the term fiduciary. The DOL’s attempt to broaden the definition of fiduciary to encompass ordinary salespeople who only provide advice incidental to the sale of products cannot be squared with the holding of Chamber of Commerce. In concluding otherwise, the Magistrate Judge’s Recommendations regularly mischaracterize or minimize Plaintiffs’ arguments, ignore or misinterpret the language of the New Interpretation, and disregard the unequivocal holdings of the Fifth Circuit regarding Congress’ intent in using the term fiduciary in ERISA. This was plainly erroneous.

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Washington Comment Letter

FACC would like to make one suggestion to the Department which is to promulgate another rule that would specify content of the required disclosures referenced in the updated statutes consistent with the NAIC Model Regulation as set forth in Appendices A, B, and C. HB 1120 provides that the Department shall post the Appendices on its website which FACC presumes will be the same forms as provided in the NAIC Model Regulation. FACC requests the Department consider adopting the NAIC appendices through a regulation that could lay out the sample forms or incorporate the NAIC forms by reference. Such promulgation, or incorporation of the NAIC forms by reference, would ensure that Washington is consistent with the NAIC model regulation in regard to disclosure requirements and provide certainty to regulated parties both now and into the future.

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FACC v. DOL Joint Motion for Extension

Based on the foregoing, Plaintiffs and Defendants respectfully request an extension of the deadline for filing objections to the Recommendations up to and including August 14, 2023. In addition, Plaintiffs and Defendants request that the Court order that the responses to any objections filed by either party will be filed on or before September 13, 2023, with any reply briefs to be filed by October 4, 2023.

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Magistrate Judge’s Recommendation in FACC v. DOL

The Court should vacate the portions of PTE 2020-02’s text and preamble that allow consideration of Title II investment advice relationships when determining Title I fiduciary status, including the New Interpretation’s (i) allowance of review that a single rollover “can be the beginning of an ongoing advice relationship” to Title II plans…

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Dear Friend Update 6-20-23

Regarding the DOL submission in our case, we think DOL sidesteps the real issue, which is that the ASA decision knocked out the lynchpin of their New Interpretation in the sense it essentially blocks DOL from applying its guidance on who is a fiduciary in typical rollover situations when rollovers were the very reason for the DOL rulemaking in the first place. We also think it is noteworthy that the ASA decision was rendered four months ago and DOL has yet to formally acknowledge that court’s decision and follow through on the remand for “further proceedings consistent with this Order.”

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