Last week, the Department of Labor’s Employee Benefits Security Administration has — for the third time this year — requested additional time from a federal court to consider a consolidated lawsuit against the DOL’s Biden-era fiduciary rule.
The DOL has asked the 5th Circuit Court of Appeals for an additional 60-day extension, following two previous 60-day delays.
The DOL fiduciary rule was previously stayed by two federal district courts in challenges brought by insurance industry groups. It is now before the US Court of Appeals for the Fifth Circuit, but the DOL has delayed the litigation while it considers a rule rewrite.
Last July, a judge put the DOL's new Retirement Security Rule, which was set to go into effect last September, on hold, and it seemed likely it would remain there until after the presidential election. Now, it will likely remain on hold a bit longer.
DOL’s hold on the fiduciary rule in 2024 had followed two federal court stays last July, which were put in place in an effort to delay implementation of the new fiduciary rule, which has been beset by lawsuits and Congressional efforts.
The new rule was set to go into effect a year ago, however, it faced legal challenges just days after it was finalized in April of 2024.
The new rule was DOL's latest attempt to extend fiduciary responsibilities to annuity sales, and hit legal roadblocks from the get-go filed by industry firms and member trade groups, including the Federation of Americans for Consumer Choice and the American Council of Life Insurers, which filed separate suits.
Under the Biden administration, the DOL had filed notices of appeal in the fall of 2024 in the two federal court rulings that stayed the implementation of the new fiduciary rule.
Under the Trump administration, the DOL wanted “to allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed,” the DOL’s motion stated. However, the DOL is requesting status reports due at 60-day intervals.
In March, Lori Chavez-DeRemer was confirmed by the Senate as Secretary of Labor. In June, Daniel Aronowitz was voted to be the assistant Labor secretary in charge of the Labor Department's Employee Benefits Security Administration.
The new fiduciary rule regulated that financial advisors act in the best interests of clients.
However, last year, Sen. Elizabeth Warren released a report identifying that at least 29 annuity and insurance companies are offering agents perks — vacations and cash bonuses — in exchange for the agents to sell their annuity and insurance products," according to her “Cancun, Cruises and Cash: How the Department of Labor's New Retirement Security Rule Would End Insurance Industry Kickbacks that Cost Savers Billions” report.
In the DOL’s latest motion for a delay, all groups in both cases consented to the extension, which will be until Oct. 14.
(Credit: Chris Nicholls/ALM; Adobe Stock)
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