The Department of Labor (DOL) has dropped its appeal of the court decision staying implementation of the agency’s fiduciary rule. This is a clear and important win for NAIFA. NAIFA along with four of its Texas chapters, the American Council of Life Insurance, and several other trade associations are plaintiffs in the lawsuit.
On November 28, the Fifth Circuit Court of Appeals granted DOL’s request to withdraw the Biden-era Department’s 2024 appeal of the court ruling that stayed the agency’s new fiduciary rule. This action disaggregates two cases and sends them back to the two district courts in which they originated. It is expected that plaintiffs will work out an end to these cases with the DOL and the approval of the courts. The likely end result will be that the current fiduciary rule that will at least initially apply is the 1975 rule that imposes fiduciary duty under a five-part test. The five elements are when advice is about the value of securities or other property, the advice is provided on a regular basis, under a mutual understanding (it need not be in writing) that the advice will serve as the primary basis for investment decisions, that the advice is individualized to the client’s particular needs, and that the advisor receives a fee or other compensation for the advice.
Prospects: The Trump DOL has already signaled (in its spring regulatory agenda) that it intends to revisit the fiduciary rule issue, targeting May as the time by which it intends to release a new rule. (Note: all regulatory agenda target dates are notoriously aspirational—DOL may or may not be ready to revisit the fiduciary rule issue by May.) Industry insiders believe the Trump DOL will be open to using a best interest standard, but that if the agency does adopt a best interest standard, it will likely be less onerous and expansive than the one adopted by the Biden DOL.
NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org