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Federation of Americans for Consumer Choice DOL Comment Letter

Office of Exemption Determinations 
Employee Benefits Security Administration 
United States Department of Labor 

Submitted through Federal eRulemaking Portal 

Docket ID number: EBSA–2020–0003 

Application No. D–12011 

RE: Improving Investment Advice for Workers & Retirees Proposal 

To Whom it May Concern: 

The Federation of Americans for Consumer Choice (FACC) wishes to express its deep concerns regarding the above proposal issued by the Employee Benefits Security Administration of the Department of Labor (herein the “Department” or “DOL”). 

FACC represents independent insurance agents and agencies that help distribute fixed insurance products including traditional fixed rate annuities and fixed indexed annuities. The primary purpose of FACC is to ensure that regulation affecting the sale of fixed products is fair and even-handed so consumers can continue to benefit from guaranteed rates of return, lifetime income benefits, and other protective features offered by fixed insurance products which have become especially valuable to those near or reaching retirement during these economically challenging times. 

We are deeply concerned about the latest proposal issued by the Department which we believe has the potential to significantly disrupt the marketplace to the extent it would turn many traditional insurance agents into fiduciaries and create unworkable hurdles for insurance agents and companies with the establishment of onerous rules and regulations designed for the securities industry rather than the insurance industry. We urge the Department to slow down and reconsider its adoption of the current proposal which we believe has not been adequately vetted and will have harmful consequences for American consumers. 

Below is a detailed discussion of our specific observations but our two biggest concerns at a high level are: 

(i) the preamble to the proposed class exemption takes a novel and expansive view of elements of the 5-part test used to define a “fiduciary” in such a way that many insurance agents will suddenly be treated as fiduciaries contrary to the holding of the Fifth Circuit decision which struck down the prior 2016 Fiduciary Rule, and 

(ii) the newly proposed class exemption fails to accord adequate deference to the National Association of Insurance Commissioner’s (NAIC’s) model best interest regulation which is contrary to harmonization of regulation and could prove highly detrimental to segments of the insurance industry – especially independent agents selling fixed 

products if deemed to be fiduciaries – who may be forced to meet standards and abide by procedures designed for the securities industry that do not comport with long-standing systems and practices used in the insurance industry.  …

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