NAFA Sues the DOL
Annuity Leadership Forum in D.C. a Success and Congress Attempts to Overturn President’s Veto
On June 2, NAFA filed a federal lawsuit in the D.C. District Court challenging the Department of Labor’s new “fiduciary rule.” The lawsuit seeks a preliminary injunction to stay the rule, which is currently scheduled to become operational in April 2017.In addition to pursuing legal options, NAFA strongly supports any efforts from the Hill to overturn the DOL rule.
The lawsuit alleges the DOL rule is invalid on grounds that the agency exceeded its authority to regulate IRAs and that it improperly categorizes insurance agents as fiduciaries. The lawsuit further alleges that the rule creates a private right of action, which only Congress can do. Additionally, the suit further alleges that the DOL’s decision to include fixed indexed annuities (FIAs) under the Best Interest Contract Exemption (BICE) in the final rule was arbitrary and capricious. A court hearing has been set for August 25 in Washington, D.C., which is the next critical step in our case.
Following on the heels of the lawsuit, NAFA members swarmed Washington, D.C. on June 8-10, for the annual Annuity Leadership Forum. Attendees were treated to excellent presentations by members of Congress including Rep. Roe, Rep. Luetkemyer and Sen. Isakson, along with a keynote speech by Jeff Bush, an accomplished political analyst. In addition to speakers, there was a DOL panel discussion and an afternoon of Hill meetings where NAFA representatives conducted over 250 meetings!
In addition to pursuing legal options, NAFA strongly supports any efforts from the Hill to overturn the DOL rule. After the House passed along strict party lines, H.J.Res. 88, a resolution that would overturn the DOL rule, the Senate approved the measure with three Democratic votes. Unfortunately, on June 8, the President vetoed the measure as expected. Shortly after this action, the House attempted to overturn the President’s veto on June 22. The measure failed 239 to 180 (2/3 needed). There will be no Senate consideration of this resolution, making the effective date of the DOL rule June 22.
Meanwhile the House remains committed to stopping the rule, and on July 7, they included language in the fiscal year 2017 Labor, Health and Human Services (LHHS) bill to gut the DOL fiduciary rule by prohibiting enforcement. The bill will be considered mid-July by the House Appropriations Committee. This language might make it through the House in September, but will hit problems in the Senate.
Please see the language below:
SEC. 110. Notwithstanding any other provision of law, no rule issued by the Department of Labor pursuant to the Employee Retirement Income Security Act of 1974, regarding the Definition of the Term ‘‘Fiduciary’’; Conflict of Interest Rule-Retirement Investment Advice, including the final rule published by the Department of Labor in the Federal Register on April 8, 2016 (81 Fed. Reg. 20945 et seq.), shall have an effective date or have any legal effect.
NAFA will continue to exercise leadership by supporting any efforts to stop the DOL rule and continue to promote fixed annuities.
Ultimately, there will be a large spending package that will likely come together later this fall, where there may be an opportunity during the lame duck session after elections to push some legislative relief. NAFA will continue to exercise leadership by supporting any efforts to stop the DOL rule and continue to promote fixed annuities.
Lastly, the House and Senate will be in recess from July 18 until September 6 (The Republican and Democratic Conventions are the last two weeks of August.). We encourage NAFA members to use the long August recess to reach out to their elected officials to educate them about fixed annuities and to explain our concerns with the DOL rule.