The National Association for Fixed Annuities has withdrawn its lawsuit challenging the Department of Labor fiduciary rule.
NAFA’s decision comes on the heels of a March 15 Fifth Circuit Court of Appeals ruling that vacated the fiduciary rule in its entirety. The NAFA lawsuit was one of two lawsuits challenging the authority of the DOL to issue the rule.
The association's membership reprsents about 85 percent of the fixed annuity marketplace, covering annuities sold by independent agents, advisors and brokers, according to NAFA.
“We are very pleased the Fifth Circuit understood the harms the fiduciary rule created for middle-American retirement savers,” NAFA Executive Director Chip Anderson said. “This ruling vindicates both NAFA’s and the Fifth Circuit plaintiffs’ chief concerns and, as a result, we see no reason to continue to pursue our litigation in another federal circuit court.”
NAFA began its legal challenge to the fiduciary rule nearly two years ago, while the the broker-dealer industry's Financial Services Institute, SIFMA, the U.S. Chamber of Commerce and a number of other trade organizations brought a similar challenge in a separate lawsuit. The lower courts in both cases ruled in favor of the DOL rule, but the lawsuit by the multiple industry groups prevailed when the Fifth Circuit overruled a District Court in Dallas.
NAFA believes the Fifth Circuit decision renders its case moot.
“We still have a lot of work to do, but now we will focus our energies on promoting insurance regulations that properly recognize differences among financial products and the way those products are delivered,” said Anderson.
He indicated NAFA will continue to engage with the National Association of Insurance Commissioners and other state and federal policymakers, which are advancing “best-interest” standards that would apply to the sale of insurance products, including annuities.
“We are confident that fixed annuities will always play an important role in meeting the needs of retirement-oriented consumers and will continue our fight to promote fair-minded regulation that gives consumers real choice in a vibrant financial services marketplace,” he said.
Both NAFA and the DOL agreed to the voluntary dismissal of the lawsuit.