Lots of Activity These Days The last few days have seen a flurry of activity! The most recent new items are:
- August 29 – Office of Management & Budget (OMB) approval of the DOL’s request for an 18-month delay to the Rule.
- August 30 – DOL issued an official announcement of the delay and has given 15 days for public comment.
- August 30 – DOL published Field Assistance Bulletin 2017-03 stating it won’t enforce a provision of the BICE’s arbitration ban.
And There’s Litigation TooFirst, and maybe foremost, we await the decision of the 5th Circuit Court of Appeals that presides over the Chamber of Commerce case. Our fingers remain crossed that perhaps that court will strike down the fiduciary rule in its entirety. The court could do a range of things that include upholding the rule, striking down the rule, or possibly remanding it to the agency for further consideration or revision. A decision could come out any day. Meanwhile, in the NAFA lawsuit, being heard in the D.C. Circuit Court of Appeals, Fidelity & Guaranty Life and MV Group filed a “friend of the court” or amicus brief, which asserts:
- The reasonable compensation standard is unconstitutionally vague; and,
- The sudden switch of FIAs to BICE was an arbitrary and capricious action by DOL creating a severely tilted playing field favoring the securities industry over the FIA industry.
What Does It All Mean?Well, despite these developments, in the big picture not too much has changed. The good is that DOL seems serious about the 18 month delay of the full exemptions. The bad is that the fiduciary rule is in force and agents must comply with 84-24 including the impartial conduct standards. The uncertain is everything else. So keep in mind:
- Advisors and agents are still required to adhere to impartial conduct standards when dealing with qualified funds.
- Whether fixed indexed annuities will end up under the BICE or PTE 84-24 is still very much in doubt.
- DOL’s latest guidance relates to its enforcement policy only on the class action limitation in the BICE and not on the Rule itself or requirements to adhere to Impartial Conduct Standards – i.e., it doesn’t really help insurance agents.