1-13-22 FACC Letter to DOL Requesting TEP Extension

There are several reasons extending the temporary enforcement policy is warranted and indeed would broadly benefit the financial services industry and most importantly consumers.  Extending the temporary enforcement policy is particularly important so financial services professionals can continue with certainty and confidence to help middle income families prepare for retirement.  It is difficult for professionals to provide needed services if there is doubt as to whether they are complying with shifting and potentially imminent new rules as the Department publicly states further rulemaking remains under consideration.  Consumers are affected by resultant confusion and uncertainty which also can add cost ultimately borne by consumers.

Via email:  walsh.martin.j@dol.gov         

The Honorable Marty Walsh
Secretary, U.S. Department of Labor
200 Constitution Ave NW
Washington, DC 20210

Dear Secretary Walsh: 

We are writing to respectfully ask that the Department of Labor extend the temporary enforcement policy for the investment advice rule (“Improving Investment Advice for Workers & Retirees”) while further rulemaking remains under consideration.

As you know, the original temporary enforcement policy, as reflected in Field Assistance Bulletin (FAB) 2018-02, provided the Department would not pursue prohibited transaction claims against investment adviser fiduciaries who work diligently and in good faith to comply with impartial conduct standards.  FAB 2018-02 was extended by the investment advice rule through December 20, 2021 and extended again by FAB 2021-02 through January 31, 2022.  While we are grateful for these prior extensions, we believe a further extension is warranted, given there remains considerable uncertainty in the marketplace and the Department continues to evaluate the possibility of further rulemaking in this area.

The members of our organization consist of independent insurance agencies and agents who are impacted by the investment advice rule and related developments. The investment advice rule, among other things, creates a new class exemption PTE 2020-02, expands the Department’s interpretation of the five-part fiduciary test, and withdraws the Deseret advisory opinion affecting rollover transactions.  While ostensibly the investment advice rule left existing PTE 84-24 intact which applies primarily to annuities, the Department has been clear more rulemaking is contemplated that could affect the definition of fiduciary as well as PTE 84-24, all of which in turn affects the insurance industry and in particular independent distributors of annuity products.  It is our view while these matters remain under review and further changes contemplated, the Department should keep the temporary enforcement policy in place.

There are several reasons extending the temporary enforcement policy is warranted and indeed would broadly benefit the financial services industry and most importantly consumers.  Extending the temporary enforcement policy is particularly important so financial services professionals can continue with certainty and confidence to help middle income families prepare for retirement.  It is difficult for professionals to provide needed services if there is doubt as to whether they are complying with shifting and potentially imminent new rules as the Department publicly states further rulemaking remains under consideration.  Consumers are affected by resultant confusion and uncertainty which also can add cost ultimately borne by consumers.     

More specifically we believe three factors should be considered.  First, we believe there is confusion in the marketplace on fundamental matters such as who is considered a fiduciary and what is required under different PTEs which is partly the result of an inherently complex set of rules and partly the result of a long winding process over a ten-year period.  Second, we think all interests are best served by adopting the rules in a singular cohesive package at one time rather than in piecemeal fashion as currently contemplated which in the long run means industry must keep making costly and cumbersome changes to their business practices.  Third, it should be recognized this is a particularly stressful period for providers and clients as the COVID pandemic continues to cause upheaval and the economy continues to struggle through unprecedented volatility which makes this a uniquely challenging time for adoption of such complex requirements.

It should be noted that this request – that the temporary enforcement policy be extended while further rulemaking is contemplated – represents our consistent position from the beginning.  That is, we made this same request as signatory to a letter submitted to the Department by a group of trade associations on September 21, 2021 but that resulted only in partial relief being provided through February 1, 2022.  We think it also bears emphasis that the insurance industry is currently working towards compliance with new best interest requirements being promulgated in a growing number of states based on the National Association of Insurance Commissioners model regulation.  While we understand that is not necessarily a substitute for PTE requirements from the Department’s perspective. we believe that such compliance in conjunction with the impartial conduct standards built into the temporary enforcement policy provide a reasonable level of protection for consumers during this interim period.

We would like to be clear, as we were in prior correspondence with the Department, that we make no admissions and reserve all rights to challenge any existing or newly proposed rules or requirements. As you can appreciate, it is necessary for us to reserve those rights relative to Department rulemaking in this area especially in view of the 2018 Fifth Circuit decision.  Meanwhile, as this regulatory process unfolds, we believe a further extension of the temporary enforcement policy will benefit all concerned.  

Thank you for your attention to this matter.


Sincerely,
Kim O’Brien
CEO, Federation of Americans for Consumer Choice

cc:        Honorable Ali S. Khawar, Acting Assistant Secretary, EBSA

Leave a Reply