DOL Fiduciary News: March 15, 2018
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DOL Wins Fiduciary Challenge in Federal Court
ThinkAdvisor | March 13, 2018
The Labor Department on Tuesday won a case in federal court brought against its fiduciary rule by Market Synergy Group, an insurance distributor.
The U.S. Court of Appeals for the 10th Circuit ruled that Labor did not “arbitrarily treat fixed indexed annuities differently from fixed annuities” under its final fiduciary rule.
Kansas-based Market Synergy Group (MSG) had argued that Labor threw FIAs under the fiduciary rule’s best-interest contract exemption, or BICE, at the last minute.
“According to MSG, the DOL simply did not give notice that it might exclude FIAs from PTE 84-24 and therefore did not give adequate notice of the final rule,” the ruling states. “We are unpersuaded. The [notice of public comment and review] clearly asks for comment on whether removing variable annuities from PTE 84- 24 but leaving FIAs and fixed rate annuities struck the appropriate balance.”
The court’s ruling found that Labor’s decision to include FIAs under PTE 84/24 was “not arbitrary or capricious.”
(https://www.thinkadvisor.com)
Where is the 5th Circuit’s decision on Labor’s fiduciary rule?
BenefitsPRO | March 14, 2018 at 07:42 PM
This week, 10th Circuit Court of Appeals affirmed a lower court ruling upholding the Labor Department’s fiduciary rule.
Market Synergies Group, a Topeka, Kansas-based independent marketing organization that accounted for $15 billion worth of fixed indexed annuity sales in 2015, sued the Labor Department over a provision in the fiduciary rule that regulates FIAs under a new, more onerous prohibited transaction exemption.
The IMO argued, among other things, that Labor failed to give adequate notice of how it ultimately treated FIAs in the regulation—administrative law requires adequate notice when regulators promulgate new rules. A proposed version of the final rule kept FIAs under the existing Prohibited Transaction 84/24, which allows commission compensation on the annuity products.
In upholding the lower court’s decision in 2016, the unanimous panel of appellate judges found that Labor did give adequate notice that it was considering moving FIAs under a new prohibited transaction exemption.
(https://www.benefitspro.com)
NAIC Begins Tough Work on Best Interest Reg
InsuranceNewsNet; March 14, 2018
With representation that spans the political spectrum, from liberal states to conservative ones, getting agreement on a best interest standard for annuity sales was always going to be tough for the National Association of Insurance Commissioners.
A conference call today to jump start discussion aimed at finalizing a new best-interest model law confirmed how difficult the task will be for the Annuity Suitability Working Group.
After the hour was up, the group agreed only on some minor language changes, setting aside more contentious issues, such as defining "best interest." Members advanced only nine pages into a 57-page document matching the rule language with comments received.
The group will reconvene March 24 in Milwaukee for the NAIC Spring Meeting. Commissioner Dean Cameron expressed hope that a final model law would be finished and voted on at that meeting.
Similar to the Department of Labor fiduciary rule, the NAIC model would place limits on agent compensation, require more disclosures and set a “best interest” standard. The standard would apply to annuity sales only.
(https://insurancenewsnet.com)