Annuity Consumer Choice Campaign wants fixed indexed annuities out of BICE
Annuity supporters are fighting to ensure that fixed indexed annuities get treated the same as other fixed annuities and not lumped in with securities products under the Department of Labor’s fiduciary rule. The newly formed group, the Fixed Annuity Consumer Choice Campaign, or FACC Campaign, is gathering signatures for a petition to be sent to Labor Secretary Alexander Acosta “urging him to delay implementation” of the fiduciary rule exemptions to July 1, 2019, and “fix the treatment of fixed indexed annuities.”
More than 1,800 signatures have been received so far, the group said.
As it stands now, fixed indexed annuities fall under the fiduciary rule’s best-interest contract exemption, or BICE.
Advisors “don’t know what their obligations are under state law” or what to do if they conflict with federal regulations,“That creates a unlevel playing field that inherently disfavors fixed annuity providers and products,” the group states on the website.
“Placing FIAs in BICE would have severe adverse repercussions for consumers by limiting choice in the IRA marketplace and would violate the spirit of the Harkin Amendment, which was adopted by Congress to distinguish regulatory treatment of FIAs from securities products,” the group’s website states.
The group’s chairman, Dwight Carter, president of Financial Security Associates, said in a statement that the new group is called “a campaign because we are singularly focused on protecting fixed annuities through both the regulatory and political process. We know it’s now or never for both our agents and our clients so we felt it was important to put together this very focused initiative.”
The National Association for Fixed Annuities, which sued Labor over its fiduciary rule, told the department in a comment letter that “the last-minute decision to unfairly and unnecessarily bifurcate the two general types of fixed annuities under two separate prohibited transactions exemptions — the best-interest contract exemption for fixed indexed annuities and PTE 84-24 for fixed rate annuities — will adversely affect retirement savers.”
The “essential change” to further the goals set forth in President Donald Trump’s Feb. 3 memo requesting that Labor review the fiduciary rule “is to return fixed indexed annuities to PTE 84-24, as was the case in the Department’s proposed rule issued in April 2015,” NAFA said.
“NAFA has maintained throughout the rule making process that both fixed rate and fixed indexed annuities should be subject to PTE 84-24 under the rule, and we have argued that the decision to switch fixed indexed annuities to the BICE reflected a fundamental misunderstanding by the Department regarding the features and similarities of these two types of fixed annuities.”