The rule is under assault in four different federal court cases. In the three court cases that have been tried so far, the courts have rejected every one of the industry’s legal challenges; those cases are now on appeal. Members of the SOR coalition are preparing amicus briefs in those cases in support of the rule.
The rule is also under threat on the Hill. So far, a range of bills designed to delay or kill the rule have been introduced in Congress. The Financial CHOICE Act contains a provision that would kill the rule and strip DOL of its independent authority to protect retirement savers from conflicted investment advice.
Specifically, the bill would tie DOL’s hands and force it to wait for the SEC to decide whether and how to regulate securities professionals. DOL would only be allowed to pass another fiduciary rule after the SEC passed its own rule, and the new DOL rule would have to be “substantially identical” to the SEC rule, even if that rule ended up being weak and toothless. If that’s not damaging enough, the Financial CHOICE Act also would impose new burdensome requirements on the SEC before it could regulate securities professionals, thus creating a roadblock for SEC action and, in turn, ensuring that DOL is forever unable to protect retirement savers from the industry-perpetrated harms that are eroding their retirement nest eggs.
Another bill that has been introduced is the Affordable Retirement Advice Protection Act, which recreates the very loopholes that the DOL closed in the fiduciary rule. This bill allows advisers to use disclaimers to avoid having to act in clients’ best interests. And it doesn’t include any provisions to force firms to eliminate practices that encourage and reward advice that is not in customers’ best interests. As a result, it would allow firms to claim that they are providing best-interest advice while continuing business as usual.