CFP Board Files Amicus in Support of DOL’s Fiduciary Rule
The CFP Board has supported the Department of Labor’s (DOL’s) legal battle against objections to the agency’s fiduciary rule, recently filing an amicus (friend of the court) brief in the U.S. District Court for the Eastern District of Texas challenging a lawsuit filed in May by The Federation of Americans for Consumer Choice (FACC) and other plaintiffs.
The FACC lawsuit aims to invalidate the DOL’s Retirement Security Rule, which was issued in April. The rule broadens the scope of fiduciary responsibility to include financial professionals who provide advice on one-time recommendations, such as rollovers to individual retirement accounts and annuity sales.
The CFP Board, in its legal brief, refutes the assertion made in the FACC suit, which is also supported by numerous opponents of the regulation, including lawmakers from both political parties. The Board points to “empirical research” and its own “practical experience” to challenge the claim that the rule would lead financial professionals to cease providing advice to less wealthy investors.
The CFP Board also argues that while the DOL’s rule aligns with the Securities and Exchange Commission’s Regulation Best Interest and other existing regulations, it will nonetheless also “fill major gaps,” as the SEC’s Reg BI “does not, however, cover significant retirement investment recommendations, as it applies only to securities.”
Accepting the FACC’s arguments will therefore “leave open significant regulatory gaps that allow advisors to recommend financial products, including insurance products, that are not in the best interests of retirement investors,” in contravention of mandates in the Employee Retirement Income Security Act of 1974, the CFP Board wrote in the brief.
The FACC’s lawsuit has garnered friend of the court briefs as well, including support from the U.S. Chamber of Commerce. In 2018, the Chamber, in collaboration with the Securities Industry and Financial Markets Association, initiated a legal challenge that resulted in the Fifth Circuit overturning the fiduciary rule implemented during the Obama administration.