American Council of Life Insurers: Flawed Proposed Fiduciary Regulatory Package Must Be Withdrawn

WASHINGTON, Jan. 3 -- The American Council of Life Insurers issued the following news release on Jan. 2, 2024:

The U.S. Department of Labor's proposed fiduciary regulatory package "has several significant fatal flaws" that would harm Americans' retirement security and must be withdrawn, the American Council of Life Insurers (ACLI) expressed in written comments submitted to the Department today.

Signed by ACLI Vice President & Deputy, Retirement Security, James Szostek and Vice President & Principal Deputy General Counsel, Howard Bard, ACLI's comments make clear that the Department's proposal to redefine the term fiduciary and amend several prohibited transaction exemptions places an "unacceptable and impermissible barrier between low- and moderate-income savers and financial professionals," denying them access to annuities - the only financial vehicle that guarantees income throughout retirement.

"It would harm the very retirement savers it purports to want to help," the comments state.

Furthermore, the proposal "incorporates many of the same inappropriately expansive and overly broad concepts as were included in the Department's 2016 regulation that was vacated by the Fifth Circuit as inconsistent with the statutory text of ERISA."

ACLI's comments also note that the proposal relies on flawed data to justify the basis for additional rulemaking. At the same time, the proposal ignores the changes in conduct standards applicable to financial professionals selling retirement products since its last rulemaking attempt. The Department also dismisses evidence from multiple sources, including Deloitte, the U.S. Chamber of Commerce and the Hispanic Leadership Fund, demonstrating how the 2016 regulation negatively impacted access to financial guidance, "particularly among underserved and middle market households and suggests that further action will perpetuate the trend."

For these and other reasons noted, ACLI urges the Department to completely withdraw the ill-advised proposal.

Read the full comment letter here (https://www.acli.com/-/media/public/pdf/leadership-initiatives/consumer-protection/acliltrdolfiduciary010224.pdf).

The American Council of Life Insurers (ACLI) is the leading trade association driving public policy and advocacy on behalf of the life insurance industry. 90 million American families rely on the life insurance industry for financial protection and retirement security. ACLI's member companies are dedicated to protecting consumers' financial wellbeing through life insurance, annuities, retirement plans, long-term care insurance, disability income insurance, reinsurance, and dental, vision and other supplemental benefits. ACLI's 275 member companies represent 93 percent of industry assets in the United States.

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Original text here: https://www.acli.com/posting/nr24-001