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Industry Groups Urge Fifth Circuit to Dissolve DOL Fiduciary Rule

The American Council of Life Insurers and the National Association of Insurance sent a letter to the Fifth Circuit Court of Appeals yesterday urging the court to issue the mandate dissolving the Department of Labor fiduciary rule “as expeditiously as possible.”

The American Council of Life Insurers and the National Association of Insurance and Financial Advisors sent a letter to the Fifth Circuit Court of Appeals yesterday urging the court to issue the mandate dissolving the Department of Labor fiduciary rule “as expeditiously as possible.”

The court was expected to issue the mandate on May 7th, making effective its March 15th decision to vacate the rule that seeks to eliminate conflicted retirement investment advice.

Until this happens, the fiduciary rule remains partially in effect and the DOL can continue its temporary enforcement policy of not pursuing claims against “investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards.”

“Those factors create palpable uncertainty for significant portions of the insurance and financial services industries—uncertainty that interferes with long-term planning, that risks generating consumer confusion, and that imposes ongoing compliance costs on regulated entities,” said David Ogden, attorney for the two plaintiffs.

The impartial conduct standards include charging reasonable compensation for services, acting in the client’s best interest, and refraining from making misleading statements.

Plaintiffs in the Fifth Circuit case also include the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association.

The DOL fiduciary rule, which would broaden the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974, is currently under review as directed by President Trump, and enforcement was previously delayed until July 1, 2019.

The DOL has until June 13 to appeal to the Supreme Court, which experts believe is unlikely.

The Securities and Exchange Commission is currently seeking public comment for its own set of proposed best interest advice rules.

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