FEDERAL COURT VACATES BIDEN-ERA, ONE-SIZE-FITS-ALL FIDUCIARY RULE

IRI Calls Decision a Victory for Consumers

WASHINGTON, D.C. – A federal court vacated a 2024 Biden Administration Department of Labor (DOL) rule that restricted consumers’ access to their choice of professional financial guidance and valuable retirement products, such as annuities, that can deliver protected, guaranteed lifetime income.

The Insured Retirement Institute (IRI), a member of an industry coalition that filed a legal action challenging the rule, celebrated the court’s decision as a victory for consumers.

“Consumers no longer face the threat of losing access to their choice of professional financial guidance or retirement products due to a poorly crafted, unnecessary Department of Labor regulation,” said Wayne Chopus, President and CEO, IRI. “We said from the beginning that the DOL regulation was not needed, and the court’s decision validates our view.”

The federal district court decision came quickly after the Department of Justice (DOJ) under President Trump decided to end the government’s defense of the Biden-era rule. Previously, the Trump Administration abandoned an appeal of a court-ordered stay on the implementation of the Biden DOL rule.

This is the second time in a decade that a regulation has been proposed to treat all financial professionals selling retirement planning products and services as fiduciaries. The first attempt to impose a similar one-size-fits-all regulation occurred in 2016 and was invalidated as arbitrary and capricious in 2018 by the U.S. Court of Appeals for the Fifth Circuit.

A 2017 Deloitte study found that more than 10 million smaller retirement account owners, with over $900 billion in retirement savings, lost access to their preferred financial professionals due to the DOL’s 2016 rule.

“This misguided rule would have made it harder for millions of Americans to access the financial guidance and retirement products they rely on to prepare for retirement,” said Jason Berkowitz, Chief Legal and Regulatory Affairs Officer, IRI. “Thanks to the SEC and state insurance regulators, we already have strong rules in place to protect retirement savers without limiting their access to professional advice. We are proud to have collaborated with our industry partners in achieving this critically important result.”

IRI communicated to the Biden White House and DOL that there is no demonstrated need for the 2024 rule. This was due to enhanced federal and state consumer protection laws put in place after the 2018 invalidation of DOL’s first misguided fiduciary rule.

“IRI members and the vast majority of financial professionals who sell securities and insurance products are dedicated to acting in the best interest of their customers, as they are already required to do under the existing federal and state regulatory framework,” Chopus added.

Financial professionals are regulated under an enhanced federal-state framework provided under the U.S. Securities and Exchange Commission’s (SEC) Regulation Best Interest and the National Association of Insurance Commissioners’ (NAIC) best interest model. All 50 states have adopted a best interest regulation.

“Now that both one-size-fits-all fiduciary rules have been conclusively struck down by federal courts in the past decade, we hope that this issue is now resolved, and consumers will enjoy unimpeded access to their choice of financial guidance and retirement products to suit their needs,” Chopus said.

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Contact: Dan Zielinski