|
Wall
Street-affiliated groups, including the U.S. Chamber Of
Commerce, last week filed a legal challenge in a U.S. District
Court in Texas to the Labor Department's new fiduciary standard
that requires financial brokers for retirement products to put
clients' best interests ahead of their bottom line.
Since then, a collection of insurance companies sued in the same
court on Wednesday, contesting the rule over its treatment of
fixed indexed annuities.
The Indexed Annuity Leadership Council, the Life Insurance Co of
the Southwest, American Equity Investment Life Insurance Co,
Midland National Life Insurance Co and the North American Co for
Life and Health Insurance said the new rule would create massive
new costs and dislocations.
The rule, effective this week, will "upend the regulatory scheme
that has for decades governed the market for fixed indexed
annuities," they said in their filing. It will also "necessitate
an overhaul of the ways in which these valuable products are
sold" and "threaten the availability of these products for the
very people the rules are intended to benefit," the filing said.
In April the Labor Department released the rule for financial
brokers who sell retirement products after a bruising fight that
spanned years.
The Labor Department compromised with the industry on a range of
provisions, and the final rule does not restrict brokers from
pushing proprietary products or recommending risky, high-fee
investments in alternative assets and certain annuities.
Market Synergy Group, an insurance agency, also sued on
Wednesday, over its treatment of fixed indexed annuities, those
that link their returns to a stock market index. That lawsuit
was filed in the U.S. District Court in Kansas.
Until this week, Congress had taken the lead in resisting the
new rule, with Republicans saying it will cut lower- and
middle-income investors off from receiving affordable retirement
advice. It passed a resolution repudiating the rule, which
President Barack Obama vetoed on Wednesday.
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
