Ding Dong, The DOL Fiduciary Rule Is (98%) Dead

By John Hilton

The Fifth Circuit Court of Appeals rejected last-minute appeals by AARP and three states to intervene and re-argue the need to save the controversial Department of Labor fiduciary rule.

Filed last week, AARP and the states (New York, California and Oregon) entered separate motions asking the court for an en banc review. In a 2-1 decision, the court sided with a group of industry plaintiffs on March 15. An en banc review enlists the entire court to re-hear the case.

The federal government, which never supported the Obama-era fiduciary rule, opted not to appeal the ruling earlier this week. Denying the AARP and states' motions essentially kills the DOL rule for good.

The court could decide to re-hear the case on its own, which seems unlikely. Otherwise, the government has until June 13 to ask the Supreme Court of the United States to take the case. That also seems highly unlikely.

“AARP is disappointed in today’s court decision denying AARP the right to intervene in the Fifth Circuit case to protect the retirement advice provided to our members and other Americans saving for retirement," the AARP said, in a statement. "AARP will continue its efforts to fight on behalf of consumers who want financial advice in their best interest. It is hard enough to save for retirement – we should do all we can to make sure retirement savers are getting the help they need.”

Fifth Circuit Judge Edith H. Jones wrote in the majority opinion that the DOL rule "fails the reasonableness test" of the Administrative Procedures Act by extending the department's ERISA authority to one-time IRA rollovers and similar transactions.

The decision went on to admonish the DOL for exceeding its authority and re-affirmed the role of Congress and the Securities and Exchange Commission in regulating agents and advisors.

President Donald J. Trump ordered the DOL to delay and further study the rule soon after taking office.

Parts of the rule went into effect June 9, but the more stringent exemptions needed to sell variable and fixed indexed annuities were delayed until July 2019.

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].

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]. Follow him on Twitter @INNJohnH.