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DOL Argues It Didn’t Overstep Congressional Mandate

September 20, 2017

The Department of Labor has filed a brief in the D.C. Circuit Court challenging an earlier claim from the National Association for Fixed Annuities that the agency had over-defined the term “fiduciary” when rolling out its best-interest retirement advice rule, Law360 writes.

The DOL’s fiduciary rule, which purports to force retirement account advisors to put clients’ interests first, went into partial effect in June. The agency’s statement comes in response to a brief NAFA filed in August, which claimed Congress hadn’t intended the term “fiduciary” to be as broad when it enacted the Employee Retirement Income Security Act in 1974, according to the legal news website. According to the DOL’s response, Congress had noted at the time that ERISA should extend to all professionals with authority over retirement accounts, and intended ERISA to protect retirees beyond then-existing laws, Law360.com writes.

“If anything, this history only emphasizes the reasonableness of DOL’s interpretation,” the brief said, according to the legal news website.

The DOL also disputed NAFA’s claim that the rule’s best interest contract exemption provision was a “backdoor” regulation, Law360 writes. The provision lets brokers sell some commission-based products in retirement accounts after signing a contract with their clients.

NAFA’s August appeal brief comes after a string of court rulings against its challenge to the DOL’s fiduciary rule, Law360.com writes. In November, U.S. District judge Randolph Moss denied the group’s motion for summary judgement, and in December the D.C Circuit Court declined NAFA’s appeal to block the rule, according to the web publication.

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But the rule is already getting gradually revamped. The rule’s final compliance deadline, originally set for January, has already been pushed back to July 2019. And the DOL is no longer enforcing a key provision of the rule barring retirement account advisors from forcing clients into arbitration waivers.

By Alex Padalka
  • To read the Law360 article cited in this story, click here if you have a paid subscription.