June 9th Effective Date for DOL Fiduciary Rule is a Grimm Reality
Despite a February presidential order to conduct a thorough review of the fiduciary rule, the Department of Labor proceeded to delay only part of the rule until next January while providing a mere 60-day delay of the onerous Impartial Conduct Standards, which will go into effect on June 9th. This development was a shock to NAFA and all stakeholders who anticipated a delay of the full rule for at least six months. Unfortunately, the complications of appointing a new DOL head, senior DOL staff from the last Administration still exerting influence, and ongoing challenges facing the new Administration contributed to the messy situation that has been thrust upon the marketplace, which unquestionably will have a devastating impact on NAFA members.
Recently, Secretary Acosta took charge at the DOL, and while he inherited a complex situation with a temporary delay of the rule being finalized prior to his appointment, NAFA believed the Secretary had several plausible tools to further delay the rule. An essential reason for further delay is to allow Secretary Acosta the time necessary to review the harmful impacts of the rule on consumers, pursuant to the February White House memorandum that directed a review of the entire rule. In April the DOL accepted public comments about impacts of the rule and NAFA filed a strong comment letter that contained new information and analysis explaining how the DOL failed in its original regulatory impact analysis. NAFA’s letter along with comments filed from other industry groups provided a strong legal basis for further delay.
In addition to filing a comment letter, NAFA was the first association to launch a White House grassroots campaign to ask the President to delay the rule in its entirety beyond the June 9th date. More than 3,000 letters were sent. Other financial services trade associations produced significant grassroots efforts as well. Also, an ad campaign was launched by the Secure Family Coalition, of which NAFA is a member. Furthermore, in conjunction with these efforts, NAFA, along with our industry partners, undertook an intense advocacy outreach effort to key House and Senate offices, which culminated in many congressional letters to the Administration and phone calls and meetings with Administration officials.
Unfortunately these robust efforts did not persuade Secretary Acosta or the White House. On May 22nd the Secretary announced that the June 9th effective date will proceed. His review of the APA concluded that the June 9th must go forward to satisfy the requirements of the Administration Procedures Act. However, he stated that the DOL will be seeking further public input on “how to revise the rule.”
NAFA was very disappointed with this outcome. We continue to be concerned with the adverse consequences that will result to middle class Americans and the entire annuity industry. NAFA will work with the Department of Labor, Congress and other industry officials to review and significantly modify or rescind the rule.