FACC Testifies Against Rule and Launches Grassroots
Phoenix, AZ, September 9, 2020 – The Federation of Americans for Consumer Choice (FACC), a group representing independent marketing organizations, is urging insurance agents and agencies around the country to contact elected officials to protest the Department of Labor’s latest iteration of the fiduciary rule.
Last week FACC testified at the Department hearing on the “Improving Investment Advice for Workers & Retirees” proposal focusing on the Department’s failure to understand independent distribution and make the rule workable for insurance-only producers. This week FACC announced it will launch a grassroots campaign to give agents the opportunity to weigh in on the rule proposal.
“We know it is late in the process, and we know this is complicated stuff, but there is near unanimity in the industry that the proposal has serious flaws and just is not ready to be finalized” stated Dwight Carter, FACC President and Owner of Financial Security Advocates, a North Carolina based marketing organization.
Kim O’Brien, FACC’s CEO, indicated the trade group would blast notice to its extensive list of agents and agencies with information about the rule proposal and how producers can contact the White House and Congress to express concern through FACC’s electronic grassroots advocacy system. “We think most agents – if they really knew what was going on – would be appalled at what the Department is considering so we want to give them the chance to make their voices heard and wake up public officials.”
In its testimony last week, FACC pointed out that there were significant procedural and substantive concerns.
“Procedurally, we cannot understand why parties are given only thirty days to comment on the rule proposal, two days to prepare for a hearing like this, and given only ten minutes to cover extremely serious issues. This rush to adoption – on a matter so profound – is simply unjustifiable.”
As to the substance of the rule proposal, FACC pointed to three primary concerns. “Substantively, the definition of fiduciary is now being blurred and rendered impossible even for lawyers to decipher let alone small business professionals. The rules of the road for rollover IRAs are being changed, raising the specter that ERISA will be applied to retail IRA sales, which cannot have been the intent of Congress. The new class exemption may work for the securities industry, but it does not work for the insurance industry,” O’Brien testified.
Throughout her testimony O’Brien emphasized differences between the securities and insurance industries especially criticizing the Department’s alleged lack of concern for independent agents. O’Brien stressed the magnitude of impact the rule would have on independent distribution using statistics and stories of agents and agencies whose business would suffer if the rule proceeded. O’Brien reported agents and agencies are worried about whether the rule would require them to get new licenses, force them to work with or for securities brokers, take away their independence, and cause additional insurance and legal costs for compliance.
“They all get that good compliance is important and has a cost but they wonder why do this now when they are already hurting with the pandemic and adjusting to new ways of working with clients,” O’Brien said. The fate of the rule proposal is currently unknown and Acting Assistant Secretary Jeanne Klinefelter Wilson closed the Department hearing last week giving no indication of the Department’s next steps.
Transcript of Testimony:
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To see the FACC grassroots campaign, please visit www.FACChoice.com and click on our TAKE ACTION button.