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FACC DOL Rule Press Release-Supplemental Brief Motion

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 which is nothing more than a rehash of the 2016 fiduciary rule and ignores the clear dictates of the Fifth Circuit decision,” said O’Brien. “It is surprising to us that the Department of Labor thinks it can propose such a regulation that ignores all the relevant litigation” continued O’Brien. “The Fifth Circuit was clear that regular salespersons are not fiduciaries and said it was ordinarily inconceivable that one-time rollovers would turn agents into fiduciaries but this proposed rule blows right by those concerns.” O’Brien added, “we feel there is no way this new rule would survive a legal challenge” and expressed hope that other trade groups would join FACC in fighting the proposal in court as necessary.

Dallas, Texas – November 9, 2023 – The trade association suing the Department of Labor over its current guidance on who is considered a fiduciary was given the go-ahead last week to brief the Texas federal court on the DOL’s newly proposed fiduciary rule.

The Federation of Americans for Consumer Choice, or FACC, contends its lawsuit is “more important than ever” even though DOL last week came out with a newly proposed rules package defining who is a fiduciary and modifying various prohibited transaction exemptions. “We think the new rule proposal just proves that DOL will not give up on trying to turn everyday insurance agents into fiduciaries contrary to the clear holding of the Fifth Circuit decision in the Chamber case,” said Kim O’Brien, the organization’s CEO.

O’Brien explained that FACC believes the DOL’s 2016 rule struck down by the Fifth Circuit, the DOL’s guidance provided in the PTE 2020-02 preamble reinterpreting the five-part test, and the DOL’s latest rules package are all “cut from the same cloth,” each trying to broaden the definition of fiduciary to sweep in insurance agents and securities brokers. O’Brien quipped, “as Yogi Berra would say it’s déjà vu all over again,” adding that FACC believes the threshold issue for the industry is and remains the definition of fiduciary.

FACC’s written request for additional briefing states “the new proposal makes explicit what Plaintiffs have said from the outset of this case” which is that the DOL’s purpose and intent—from the time of the 2016 Fiduciary Rule, through the New Interpretation of the five-part test, and now with the latest rule proposal—is to treat every financial professional who sells an investment product to a retirement investor as a fiduciary. FACC contends the new rules provide further context that belie DOL attempts to downplay the intent and meaning of the 2020 reinterpretation.

FACC’s request for additional briefing also contends the latest DOL rule proposal is relevant to other lawsuit issues. FACC contends the overhaul of PTE 84-24 undermines DOL assurances in prior briefing on the availability of a more accommodating class exemption for insurance agents. FACC also contends President Joe Biden’s visible public support for the new rule bolsters its case for invoking the major question doctrine under which less deference would be given to the DOL’s interpretation of ERISA.

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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 which is nothing more than a rehash of the 2016 fiduciary rule and ignores the clear dictates of the Fifth Circuit decision,” said O’Brien.

“It is surprising to us that the Department of Labor thinks it can propose such a regulation that ignores all the relevant litigation” continued O’Brien. “The Fifth Circuit was clear that regular salespersons are not fiduciaries and said it was ordinarily inconceivable that one-time rollovers would turn agents into fiduciaries but this proposed rule blows right by those concerns.” O’Brien added, “we feel there is no way this new rule would survive a legal challenge” and expressed hope that other trade groups would join FACC in fighting the proposal in court as necessary.

According to the order issued by presiding district court Judge Ed Kinkeade, FACC has until December 4 to file its supplemental brief explaining the relevance of the DOL’s new rule in the case, and the DOL then has until January 5 to file its reply.

Click here to access FACC’s approved Motion for Leave to File Supplemental Brief

The Federation of Americans for Consumer Choice, Inc. (FACC) is a 501(c)6 non-profit organization incorporated in the state of Texas whose members are independent marketing organizations, agencies, and agents engaged in the distribution of fixed insurance and annuity products. FACC promotes public policy recognizing the value of guaranteed insurance solutions and preserving freedom of choice for
consumers who seek products and services from independent agents representing multiple carriers and product options.
| FACC | www.FACCnow.org| 414-332-9312|

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