Government Affairs Update

October 11, 2021


Gensler Pressed on RILAs and Reg BI at House Financial Services Committee

Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), appeared before the House Committee on Financial Services on October 5 for an oversight hearing. In his testimony, Chairman Gensler raised four policy themes from the SEC’s agenda: Market Structure, Predicative Data Analytics, Issuers and Disclosures, and Funds and Investment Management. While the discussion at the hearing covered a range of topics, two IRI priorities – the registration of index-linked annuities and Regulation Best Interest – were raised during the hearing. Representative Alma Adams (D-NC) pressed Chairman Gensler on the SEC’s actions on a registration form for registered index-linked annuities (RILAs) and raised her bill, the RILA Act, stating, “In recent years, there’s been an increase in demand for RILAs and these products which provide the benefits of market exposure, while simultaneously offering protections against extreme downward market volatility. I’ve heard from issuers of RILA, including companies located in my district here in North Carolina, that the lack of a tailored form of registering these products has complicated their ability to market these products effectively. The Consumer Federation American, Council of Life Insurers, and others have endorsed the bill and has a strong bipartisan support from members of the committee. So, I wanted to just flag this for you, like Senator Smith in Minnesota did in your last hearing, but I look forward to working with you to advance this legislation.” In response, Chairman Gensler noted that he was asked a similar question last week by Senator Tina Smith (D-MN) and that since that interaction he has “asked the [SEC] staff to consider some of the things [Rep. Adams] and the Senator have raised and to make some suggestions.”

Regulation Best Interest (Reg BI) was raised during a question by Representative Ann Wagner (R-MO). “Chair Gensler, you have brought on staff with a clear public record of opposing Reg BI,” stated Rep. Wagner. “You can understand how that would give the investing public the impression that the SEC, under your leadership, is not committed to Reg BI. […] Do you still commit, sir fully, to supporting the continues implementation of Reg BI?” Chairman Gensler commented that he remains committed to implementation of Reg BI – as he stated during his confirmation hearing – and that he looks to “ensure that our regulations — Regulation Best Interest, and others, live up to what’s written down on the page and really is Regulation Best Interest is that investors are getting the best interest when a broker is — is making recommendations.”

IRI will continue to monitor the House Financial Services Committee for any actions related the RILAs and Regulation Best Interest.

Any questions should be referred to John Jennings.


EBSA Nominee Testifies Before Senate HELP

Lisa Gomez, President Biden’s nominee to serve as the Assistant Secretary of Labor for Employee Benefits Security, appeared before the Senate Committee on Health, Education, Labor, and Pensions (HELP) for a confirmation hearing last week. In opening comments, Committee Chairwoman Patty Murray (D-WA), noted the Employee Benefits Security Administration’s (EBSA) work overseeing retirement plans and raised the role it plays “in addressing threats to families’ financial security like unscrupulous financial advisers that may put their own interest above the financial security of those who turn to them for help or the growing array of cyber security threats.” Adding that “EBSA faces the challenge of helping retirement plan participants recover the benefits they are entitled to.” Senator Tommy Tuberville (R-AL) focused his questions on the Department of Labor’s plan to unveil a rulemaking later this year to extend the high legal bar of fiduciary prudence to advisers recommending rollovers into individual retirement accounts or post-plan annuities. “[Best Interest] should be the cornerstone of being a fiduciary,” said Gomez in response to Sen. Tuberville. “But, in determining exactly who is a fiduciary in different contexts has been the source of some disagreement, and it’s been a long road to get there. And I look forward, if I am fortunate enough to be confirmed, to working with the SEC as well as with the department to be briefed on the efforts of looking at the definition of fiduciary in different contexts and taking another look at the conflict-of-interest rule and how it would apply in different situations.”

IRI will monitor the HELP Committee for any relevant written responses to questions for the record and for a vote on Gomez’s nomination.

Any questions should be referred to Paul Richman.



Montana Issues Bulletin on New Annuity Training Requirements


The Commissioner of Securities and Insurance, Office of the Montana State Auditor (CSI) has issued a new bulletin summarizing the training requirements pursuant to Montana’s new best interest statute and administrative rules for producers who sell annuities. The bulletin also includes a reference chart of the new requirements.


Any questions should be referred to Sarah Wood.

OMB Concludes Review of ESG Investing & Proxy Voting Proposal

The White House Office of Office of Management and Budget (OMB) concluded its review of the DOL’s new proposal on environmental, social, and corporate governance (ESG) investing and proxy voting last week. The proposed rule follows two executive orders issued by President Biden earlier this year that directed the DOL to take a more proactive role in environmental-focused investing. The DOL is now free to formally publish the proposal, starting the clock for a notice and comment period, preparation of a final rule and an eventual effective date. IRI will continue to monitor developments on this proposed rule and the Retirement Plans and Tax Committee will be tasked with preparing responsive comments to the text of the proposed rule once available.

Any questions should be referred to Emily Micale.

IRI Presents at NAIC E-Commerce Working Group Meeting

IRI presented at the NAIC E-Commerce Working Group meeting on October 7 on the operational and technological challenges that its members are facing in this area. IRI recommended that the NAIC consider proceeding along three parallel tracks: 1) address “quick wins,” such as encouraging the permanent adoption of temporary accommodations during the pandemic, 2) address specific regulatory changes/updates that might be needed, and 3) develop model guidance or a bulletin for the individual states to issue that would validate and confirm that particular industry practices using modern technology are permitted under applicable state laws and rules. Maryland Insurance Commissioner Kathleen Birrane, the Working Group Chair, indicated that it will be important for the industry to consider how consumer protections will be addressed in relation to e-commerce. IRI will continue to engage with its members on these issues, do outreach as necessary to consumer groups, and collaborate with the NAIC and the joint trades.

Any questions should be referred to Sarah Wood.