Complicating things further, the DOL faces two lawsuits seeking to toss out the investment advice rule, he said.
The American Securities Association and the Federation of Americans for Consumer Choice, a trade group that represents insurance and annuities businesses, each filed suits in February to set aside the DOL’s attempt to define fiduciary investment advice. Both lawsuits assert that the agency has overstepped its legal and regulatory authority.
In particular, both lawsuits allege that the DOL’s ruling that first-time advice to transfer retirement assets out of a federally regulated plan or IRA can constitute fiduciary advice oversteps the DOL’s authority.
In 2018, the U.S. Court of Appeals for the Fifth Circuit vacated the Obama-era DOL rule, ruling that the creation of a new regulatory scheme for retirement investments and the expansion of service providers’ obligations and investors’ ability to enforce the law in court requires an act of Congress rather than an unelected agency of the executive branch.
The new lawsuits assert that the Fifth Circuit decision is the precedent with regard to the DOL’s authority to regulate retirement assets.
Campbell warned that the outcome of such lawsuits can be unpredictable.
"If we go back to 2016 when the DOL did the fiduciary rule that was ultimately struck down by the Fifth Circuit, the DOL had won something like five lawsuits at different District Court levels before the Fifth Circuit knocked it out," he said.