The Shot Heard Across the Nation…

…last Wednesday was the sound of a DOL proposal to delay further implementation of the fiduciary-rule exemptions until July 2019.  The Department’s proposal to extend the Jan. 1 effective date for the remaining portions of the exemptions was first disclosed in documents released Wednesday in a court challenge Thrivent Financial for Lutherans v. Perez.

Very limited information is currently available so nobody knows what DOL is proposing exactly – but the DOL Rule is hardly dead.  We only know DOL proposed to the Office of Management and Budget (OMB) that three exemptions be amended – including BICE and PTE 84-24 – and that the title of the amendment says “Extension of Transition Period and Delay of Applicability Dates from January 1, 2018 to July 1, 2019.”

It is a hopeful sign for sure even though its meaning is a bit murky.  Most in the press and at trade associations are interpreting it to mean DOL will be extending the June 9th versions of the modified exemptions (BICE and PTE 84-24) to July 1, 2019.  That means the status quo would remain in place for almost two more years while DOL continues to study the exemptions.  It also means that during that period the additional requirements of BICE would remain on hold -which is the good news.

However, there are other ways to read this.  It is also possible that DOL is proposing additional requirements during this interim period through July 1, 2019.  It is also possible DOL is proposing changes now to the exemptions that would take effect on July 1, 2019.  These latter scenarios seem less likely but nothing can be ruled out given our history with this issue.

And on top of all of that, these amendments are over at OMB, which means at this stage they are merely proposals, whatever they are, and they could still change.  There is also word on the street that DOL may put its proposal for delay out for notice and comment.  This would mean the proposed delay would remain merely a proposal for a period of time until the Department gets public input and issues a final rule concerning delay.

So . . . as usual . . . there are lots of unknowns.  What it really means is we cannot let our guard down.  Keep in mind the fiduciary rule itself is now law.  Keep in mind too that all annuity sales are currently subject to the impartial conduct standards.  The FACC Campaign is going to continue to monitor the situation, work on our push to get FIAs into PTE 84-24 (for whenever these requirements ultimately kick in), and continue to consider possible best practices under PTE 84-24 such as proper disclosure and documentation.