The Department of Labor has issued technical corrections to the fiduciary rule, specifically clarifying whether insurance companies can use the best interest contract exemption as well as principal transaction exemption clarifications.
Meanwhile, the first hearing has been set in the string of lawsuits that have been filed to kill the rule, and the House Appropriations Committee’s fiscal 2017 funding bill seeks to torpedo it.
Micah Hauptman, financial services counsel with the Consumer Federation of America, told ThinkAdvisor on Friday that the technical corrections DOL issued are “fixing typos and making other minor clarifications for the avoidance of any doubt about the rule.”
The technical correction DOL issued to BICE deals with the actuarial review of insurance companies, Hauptman explains. “States typically require insurance companies to receive annual an actuarial review but not all states require that review to be conducted by an ‘independent firm.’ The rule inadvertently included the words ‘independent firm’ to the actuarial review requirement, so the DOL has deleted those words to avoid any doubt that all insurance firms that comply with state requirements can gain exemptive relief under the BIC [or BICE], which is what everyone already understood to be the case.”
Phyllis Borzi, assistant secretary of Labor for DOL’s Employee Benefits Security Administration, said in a recent interview that DOL has been getting feedback on areas in the rule that need tweaking. “People have given us, and we are meeting with people, who have identified areas [where] they want some clarification,” she said. “Some of it is more substantive than others; in some cases it’s tweak a few words.”
House Spending Bill
The House Appropriations fiscal 2017 Labor, Health and Human Services funding bill, released Wednesday, states that no DOL fiduciary or conflict of interest rule “shall have an effective date or have any legal effect.”
CFA’s Hauptman said in a previous interview that the next attempts to kill DOL’s rule would be inserting a policy rider on a spending or budget bill to defund the rule as well as attempts “to delay implementation” of the rule.
Hauptman argued that DOL’s fiduciary rule “could be the next Obamacare where every few months, members reiterate how strongly they oppose this rule.”
Other “backstops,” Hauptman said, could be a court granting a preliminary injunction, as well as a string of bills offering “technical” fixes to the rule, “like what we’ve seen in the Dodd-Frank context … to chip away and open a loophole in the rule.”