An annuity and insurance industry trade group that's suing to block the DOL's fiduciary rule is asking a federal judge to make a speedy decision on the matter.
The Federation of Americans for Consumer Choice (FACC), which was the first industry group to file a lawsuit against the DOL and its rule, filed a brief last week asking Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas to make his decision on the group's injunction request as soon as possible and by July 26.
FACC and several independent insurance agent groups filed a lawsuit against the DOL last month that asks the court to overturn the rule and issue an injunction to stay the rule while the court deliberates the rule's fate. The FACC lawsuit was followed by a second suit from nine insurance and annuities trade groups, including the American Council of Life Insurers.
The rule, which extends a fiduciary standard of care to brokerage and annuity transactions for the first time, is set to go into effect September 23. Only a preliminary injunction issued by a federal court can stay the rule.
FACC and several independent insurance agents filed their lawsuit in the Eastern District of Texas, which is within the purview of the the same Fifth Circuit Court of Appeals that vacated a similar Obama-era DOL rule in 2018.
"Thousands of other insurance agents, insurance agencies, and related parties across the United States will be required to comply with the requirements of the new rules," the FACC said in its brief. "Such compliance requires significant lead time for the Plaintiffs and similarly situated parties to implement the new rules.”
The court’s briefing schedule ends July 10 and FACC attorneys Figari & Davenport said in the brief they can be ready to offer oral arguments between July 10 and July 25.
Consumer and fiduciary advocates have supported the DOL rule, which the Biden administration said is partly aimed at reducing "junk fees" imposed by some advisors on clients who are seeking to roll over their 401(k) retirement assets.
"If you come from a middle class family like I did, the thing that makes you angry, angry as hell, is these junk fees that they sneak into your bill. They take real money from middle-class Americans. They weigh you down and make it harder to pay your bills,” Presidet Biden said in unveiling the rule.
Industry groups argue that the DOL has overstepped its authority in issuing the rule.
“FACC is disappointed that the DOL has chosen to go down this same tired path with yet another proposal that blatantly violates the 2018 ruling by the Fifth Circuit and arrogantly ignores limitations of its authority under ERISA,” FACC’s CEO Kim O’Brien said in a statement about the lawsuit.
For the first time, “the rule will pretty much trigger the rule for every sales transaction,” said Scott Sinder, a partner with the law firm of Steptoe LLP.