The American Council of Life Insurers is celebrating the official delay of the compliance deadline for major extensions of the U.S. Department of Labor fiduciary rule standards, and preparing for a tough new round of negotiations.
Dirk Kempthorne, the group’s president, put out a statement praising DOL officials for deciding to put off enforcement of the add-on standards for 18 months.
Kempthorne also praised department officials for talking about plans to work with members of Congress, state insurance regulators and other policymakers on revising the regulation and the related add-on standards, or “prohibited transaction exemptions” (PTEs).
“We agree with the department’s desire to promote coordination among regulatory stakeholders,” Kempthorne said.
But Kempthorne seems to assume in the statement that policymakers will work to develop “reasonable and appropriately tailored rules,” rather than throwing out the current regulations altogether.
(Related: Annuity Rules Should Apply to Investment-Type Life Products: Consumer Reps)
The final, revised regulations should “require all sales professionals to act in the best interest of their customers,” Kempthorne said. “A collaborative and harmonized approach would ensure all consumers receive retirement savings information and related financial guidance from financial professionals acting in their best interest, regardless of the products they purchase.”
Policymakers should eliminate any bias in the revised regulations against annuities, or against commission-based compensation arrangement,” Kempthorne said.
Kempthorne argued that keeping the annuity and compensation provisions now in the regulations would block consumer access to the only product that can guarantee access to a lifetime income.
The DOL Fiduciary Rule
Officials at the Employee Benefits Security Administration, the arm of the DOL that oversees employer-sponsored health plans and retirement plans, developed the fiduciary rule, and the fiduciary rule PTEs, during the administration of former President Barack Obama, in response to complaints that some retirement product sellers were saddling retirement savers with flawed, overpriced products.
Fee-based advisors and their supporters have argued that commission-based compensation clouds financial professionals’ judgment.
EBSA ended up developing a main regulation, and PTEs, that favor independent, fee-based advisors; put tight restrictions on distributors of indexed annuities; and help retirement savers go to court to resolve disputes with retirement advisors.
Life insurers and annuity issuers fought the regulations hard, and rule watchers expected the administration of President Donald Trump to work as quickly as possible to kill, delay or change the regulations.