In a ruling on Friday, Washington-based district judge Randolph Moss turned down the lawsuit filed by the body, which represents insurers in the US.
“The court will deny NAFA’s motions for a preliminary injunction and for summary judgment and will grant the [Labor] Department’s cross-motion for summary judgment,” wrote the judge.
In its preliminary injunction, Nafa was hoping to delay the introduction of the fiduciary rule, due to come into force in April, often cited as the US equivalent of the UK’s retail distribution review (RDR), which will require specialist retirement advisers to put their client’s interests first.
Asking the court to kibosh the fiduciary standard, the trade body challenged the new rules “on numerous grounds,” including the new definition of what a fiduciary is and a claim that the DoL had acted beyond its remit, according to the ruling.
“The new rules will have catastrophic consequences for the fixed indexed annuities industry,” slammed Nafa.
‘Win for Americans’
US secretary of Labor, Thomas Perez, who was named in the suit, described the ruling as “a win for working Americans who simply want a secure retirement.”
“The conflicts of interest rule was developed after substantial input from a variety of stakeholders, including the industry, and it will make sure that retirement savers receive advice that puts their interests first,” he said in a statement Saturday.
“I’m pleased that the court recognized the comprehensive and thoughtful process we used in crafting this rule.”
Despite the victory, the DoL and Perez still face five lawsuits from firms and industry trade groups seeking to scrap the new fiduciary rule, including one filed in September from Thrivent Financial for Lutherans, a firm which provides financial advice to Christians.
Last week, the DoL issued its first set of guidelines on the reforms, which are expected the have the have the biggest impact on brokers, who currently must sell investment products that are suitable for their clients, a less-stringent standard than the fiduciary requirement whereas investment advisers already adhere to a best-interest standard.
The document included 34 frequently asked questions (FAQs) and answers on the best interest contract exemption (Bic), which allows brokers to sell some commission-based products after signing an agreement with the client.
