A Topeka, Kan. court will hear arguments Aug. 24 on insurance agency Market Synergy Group’s lawsuit to stop the Department of Labor fiduciary rule.
The Market Synergy lawsuit in U.S. District Court for the District of Kansas is one of three lawsuits seeking a preliminary injunction. As it stands, it will be the first appeal to be heard.
A lawsuit filed in District of Columbia District Court by the National Association for Fixed Annuities has an Aug. 25 hearing date. Three lawsuits filed by several plaintiffs in U.S. District Court Northern District of Texas were consolidated by the court.
That action does not have a scheduled hearing date.
Market Synergy is represented by Carlton Fields Jorden Burt, a Washington D.C. law firm, which submitted testimony from industry players in a bid to show harm the rule will cause the annuity industry.
In particular, fixed indexed annuities, said Sheryl Moore, president and CEO of Moore Market Intelligence and Wink Inc., publisher of Wink’s Sales & Market Report. She submitted one of eight affidavits filed to support the Market Synergy lawsuit.
In a surprise move, FIAs were pulled from the 84-24 Prohibited Transaction Exemption in the final DOL rule. To sell FIAs with a commission in the future, agents will need to comply with the much tougher Best Interest Contract Exemption.
That means hefty disclosures and a contract that must be signed between the agent and client.
“I can attest that the rule change was totally unexpected by the fixed indexed annuity industry,” Moore wrote in her affidavit. “The rule change directly threatens the viability of the predominant distribution channel for fixed indexed annuities through independent agents who are not affiliated with a broker-dealer.”
Plaintiffs in the Northern District of Texas lawsuit include the U.S. Chamber of Commerce, the Indexed Annuity Leadership Council, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors.
Attorneys on both sides have agreed to a longer schedule in that case. The schedule will have attorneys making oral arguments on the fiduciary rule before a judge by the end of October.
The initial requirements of the fiduciary rule are set to take effect April 10, 2017, with the full rule to apply on Jan. 1, 2018.
At more than 1,000 pages, the rule will impose the most far-reaching changes to the management of money flowing into qualified retirement account.
Regulators say the rule is necessary because it protects investors in an era when more Americans are managing their own retirements.
Opponents, including insurers and distributors, say many financial advisors will leave the business or abandon marginally profitable retirement accounts and leave middle-class retirement investors without the retirement guidance they need.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org.
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