Tuesday, February 28, 2017

NAFA MEMBER ALERT: Wednesday, February 21, 2017


RE: UPDATE ON NAFA’S FIGHT TO DEFEAT THE DOL FIDUCIARY DUTY RULE
 
Things are moving fast and furious as NAFA continues to fight the DOL fiduciary duty rule on all fronts: legislatively through Congress, administratively through the agency rulemaking process, and, of course, through the courts with our ongoing lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit.
Additionally, there has been activity in the three other lawsuits brought in Kansas, Texas, and Minnesota:

  • On February 8th, the Texas court granted summary judgment in favor of the Department of Labor. Plaintiffs in that consolidated lawsuit, led by the U.S. Chamber of Commerce, have thirty (30) days to file notice of appeal. 
  • On February 17th, the Kansas court granted summary judgment for the DOL, issuing the following opinion. There too, the plaintiff, Market Synergy Group, has 30 days to notice an appeal of that judgment. 
  • In the Minnesota case, where oral argument had been set for Friday, March 3rd, the Department filed a request for stay in that matter, which was opposed by the plaintiff, Thrivent Financial for Lutherans, on February 17th, on both procedural and substantive grounds.
In the meanwhile, NAFA submitted a comment letter to the Department on Friday, February 17th in general opposition to the Department’s Proposed Best Interest Contract Exemption for Insurance Intermediaries. Recognizing that the Proposed Exemption would have devastating effects on IMOs – particularly on small and mid-size organizations, many of which are NAFA members – NAFA’s comment letter addressed, in particular, the arbitrary and unjustifiable $1.5 billion premium threshold and the 1%-of-premium ‘financial responsibility’ set-aside requirement that IMOs would need to meet in order to qualify under the exemption. As was clear in the promulgation of the Rule, this proposed exemption reveals a profound misunderstanding of fixed annuity products and the way those products are sold and delivered. In light of the ongoing lawsuits, as well as the February 3, 2017 White House memorandum directing the DOL to undertake a review of the Rule, NAFA requested an indefinite postponement of the Proposed Exemption.
 

NAFA continues to monitor all developments regarding the fiduciary duty rule and will continue to work all channels to have the rule rescinded.