Two House committees voted today to torpedo the Department of Labor’s embattled fiduciary rule.

The House Committee on Education and the Workforce approved a Congressional Review Act (CRA) resolution to disapprove the DOL’s retirement security rule, which broadens the fiduciary standard to apply to all professionals who offer investment advice to retirement rollover clients, including insurance agents and those who provide one-time advice and annuities recommendations.

The resolution was approved by a 23-to-18 vote. The measure, which was sponsored by Republican Rep. Rick Allen of Georgia and has 51 cosponsors, now goes to the House floor for a vote. If a CRA joint resolution of disapproval is approved by both houses of Congress and signed by the president, a rule cannot go into effect.
 
In separate action, the House Appropriations Committee approved a policy rider on a 31-to-25 vote to prevent the agency from spending any funds “to administer, implement or enforce” the DOL’s fiduciary rule or its prohibited transaction exemptions. The rider was inserted in the DOL’s budget allocation for fiscal year 2025.

Both Republican-led actions are largely symbolic since it's virtually assured that they would ultimately be vetoed by President Joe Biden, whose administration has voiced strong support for the rule.

Republican Rep. Virgina Foxx of North Carolinia, chairwoman of the Educationa nd Workforce Committee, called the rule, which was designed to reduce conflicted investment advice for retirement accounts, “reckless overreach by the Biden administration that will have devastating impacts on Americans' retirement savings. ... One study projects that a rule like this would, over the course of 10 years, reduce the retirement savings of 2.7 million Americans with incomes below $100,000 by approximately $140 billion."

The Insured Retirement Institute (IRI), a trade association for annuities providers and marketers, lobbied Congress to support passage of both measures to block implementation of the rule, which is scheduled to go into effect September 23. IRI is a plaintiff in a American Council of Life Insurers lawsuit against the DOL to overturn the rule that alleges the DOL unlawfully expanded the definition of a fiduciary and jeopardizes investors’ access to advice and education. The council's lawsuit was joined by the Financial Services Institute (FSI) and the Securities Industry and Financial Markets Association (SIFMA) last month.

The IRI alleges that the new rule is similar to a DOL rule adopted during the Obama administration that the U.S. Fifth Circuit Court of Appeals struck down in 2018.

Advisor and consumer groups, however, argue the new rule is necessary to protect investors and plug regulatory gaps that leave large swaths of advice unregulated.

CFP Board General Counsel Leo Rydzewski said in an interview that for years the industry has been moving in the direction of requiring professionals to act in clients’ best interest, “but since insurance and fixed-annuities aren’t covered by existing regulations, there is an enormous gap in protections on some of the most important assets that an American has—their retirement savings. The DOL is seeking to fill that gap by modernizing the regulation to apply particularly to retirement insurance products not currently regulated as securities."

The CFP Board filed an amicus brief supporting the DOL rule in a separate lawsuit brought by the Federation of Americans for Consumer Choice and other insurance and annuities plaintiffs to challenge the rule. “We filed the brief because we believe that it’s important for the court to know that approximately a third of financial professionals in the U.S. share our worldview that the American consumer should be working with a financial professional who works in their best interest,” Rydzewski said.