Round and Round We Go (Where We Stop Nobody Knows)

Lots of Activity These Days The last few days have seen a flurry of activity!  The most recent new items are:

And There’s Litigation Too

First, 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:
  1. The reasonable compensation standard is unconstitutionally vague; and,
  2. 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.
The amicus brief supports the NAFA brief but goes deeper on a couple key issues to help the court see the real consequences of the DOL’s rule on carriers and agents.  It stresses the confusing and contradictory information provided by DOL on what is meant by “reasonable compensation” as well as the severe consequences for non-compliance.  It also emphasizes that the switch of FIAs from PTE 84-24 to BICE could expose the FIA industry to greater litigation exposure.

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.
Explaining that last point, originally the BICE essentially prohibited financial institutions from requiring clients in any pre-dispute arbitration agreement to waive their right to participate in class action litigation.  Since insurers do not generally use arbitration agreements, none of this really applies to the FIA industry.  However, DOL removed that prohibition because it was viewed as conflicting with the Federal Arbitration Act, and is mostly a victory for securities firms. Keep watching for updates . . . . and keep the faith! Many of us are out their fighting on behalf of FIAs and America’s FREEDOM TO CHOOSE the products and services that best meet their retirement savings needs.  Keep on checking in with the FACC Campaign for the important FACTS here at And when called upon, be ready to TAKE ACTION.    


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