DOL is overreaching its authority again, fiduciary rule critics tell Texas federal court
A coalition representing life insurance and annuity issuers told a federal court in Texas that the US Department of Labor’s new fiduciary rule overreaches its authority and flouts previous court rulings.
In a filing submitted Friday, the coalition which includes the American Council of Life Insurers, several chapters of the National Association of Insurance and Financial Advisors, and the Insured Retirement Institute, argued that the DOL’s new rule, unveiled in April, disregards a 2018 Fifth Circuit Court of Appeals decision that vacated its previous 2016 rule.
The group initially launched its legal action against the DOL in May, roughly one month after the new fiduciary rule was approved and finalized.
“DOL devotes the bulk of its opposition attempting to defend the rule on the merits, barely contesting the other preliminary-injunction factors,” the filing stated. “In doing so, DOL merely relitigates, rather than faithfully abides by, the Fifth Circuit’s 2018 decision to vacate its previous 2016 attempt at imposing a fiduciary standard.”
That decision in the landmark legal challenge Chamber of Commerce v. U.S. Department of Labor established that ERISA codified the common law understanding of fiduciary relationships based on trust and confidence. The coalition argued that DOL’s new rule ignores this distinction, transforming insurance agents and brokers into fiduciaries without considering whether their relationships meet the common law definition.
“The rule seeks to transform virtually all insurance agents and brokers who recommend retirement products in compliance with existing state and federal laws into fiduciaries without regard to whether those relationships actually are or would be ‘fiduciary’ at common law,” the
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