DOL Fiduciary Rule One Step Closer To History

By John Hilton

The federal government missed a deadline Monday to appeal a ruling tossing out the controversial Department of Labor fiduciary rule.

The decision means that the March 15 Fifth Circuit Court of Appeals ruling is slated to take effect May 7.

A few hurdles still remain. Last week, AARP filed an appeal of the Fifth Circuit ruling, while New York, Oregon and California filed a motion asking the court for permission to rehear the case in front of the full panel of judges -- known as an en banc review.

President Donald J. Trump's administration opposed the rule from day one, so the government's decision is not a surprise.

"The policy outcome is generally in line with what the administration wants," said Bradford P. Campbell, an attorney at Drinker Biddle and former head of the Employee Benefits Security Administration, the department responsible for the fiduciary rule.

Campbell made the comment during a recent webinar by Drinker Biddle.

If the Fifth Court decision holds, it means the impending DOL rules concerning rigorous exemptions won't ever take effect, and it also means the impartial conduct standards that took effect June 2017 will be voided.

The Fifth Circuit's 2-1 decision came down March 15, reversing several losses by industry opponents in courts from Kansas to Washington, D.C.

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.

The DOL rule was created by the Obama administration, but 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.