The U.S. Senate passed a resolution Tuesday evening that would block the Obama administration’s controversial fiduciary rule.
While likely a ceremonial vote (the White House has said Obama will veto the bill), fiduciary rule opponents say it keeps the momentum going against the rule.
"Americans for Annuity Protection is pleased that we now have a Senate bill that mirrors the House bill," said Kim O'Brien, vice chairman and CEO of AAP. "We are disappointed that President Obama has promised to veto and we will need a full-court press on all representatives to overturn a veto."
Assistant Secretary of Labor Phyllis Borzi stated today that the rule is “far reaching” and to “err” on the side of a best interest contract while the agency works on guidance to interpret the rule," O'Brien said. "A far reaching rule that causes advisors to 'err' cannot be good for consumers."
AAP maintains that middle America savers will be lost because the rule favors large wirehouses and Wall Street firms with the structure and funds to figure the out the regulation and comply with it.
"That means the smaller independent firms will exit the annuity IRA business and employees will be forced to let their retirement savings languish in underperforming, high fee 401(k) plans," O'Brien said.
Senators voted 56-41 to approve the measure, which the House adopted 234-183 last month. Sponsored by Rep. Phil Roe, R-Tenn., the bill is a formal rebuke, under the Congressional Review Act, of the Department of Labor’s fiduciary rule.
The House vote tally did not meet the two-thirds majority that would be needed to override a presidential veto. The Senate vote followed a similar party line, with Sens. Joe Donnelly, D-Ind., Heidi Heitkamp, D-N.D., and Jon Tester, D-Mont., voting with Republicans.
The DOL proposed new fiduciary rules in April 2015, which cover advice provided regarding qualified retirement employer-sponsored plans and individual retirement accounts.
DOL officials and public interest groups say the rules, which impose a fiduciary standard of care on financial advisors dealing with retirement accounts, are necessary to protect retirement investors from high commissions.
Critics say the DOL is trying to force the industry to move from a commission- to a fee-based model. The rule allows for commissions via a prohibited transaction exemption, but industry officials say it isn’t realistic due to the burdensome regulations.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]
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