A long-time proponent of the Labor Department’s fiduciary rule is planning to challenge the recent 5th Circuit decision to vacate the rule.
Politico Pro reports that AARP is challenging the March 15 ruling by U.S. Court of the Appeals for the 5th Circuit that vacated “in toto” the fiduciary rule, concluding that the Labor Department exceeded its authority with a regulation that was “unreasonable” and an “arbitrary and capricious exercise of administrative power.” According to Politico Pro, AARP is stepping in because it fears the Trump administration might not defend the rule.
The motion is expected to be filed today, April 26, at the 5th Circuit Court of Appeals. AARP will be asking for permission to intervene in the case and for an “en banc” review (i.e., by the court’s full panel of judges) of the earlier decision. Politico Pro says that in its court filing, AARP says the 5th Circuit’s decision “creates an irreconcilable intra-circuit split (within the Circuit itself) and conflicts with Supreme Court precedent.”
“AARP is not giving up on our fight to make sure that hard-earned retirement savings have strong protections from conflicts and hidden fees,” Nancy LeaMond, AARP’s chief advocacy and engagement officer said, according to Politico Pro. “The recent court decision allows some financial advisers to provide guidance based on what’s best for their pocketbooks, not the consumers.”
In 2014, AARP signed on with a consortium of unions and consumer groups in a “Dear Member of Congress” letter lending their support to the Department of Labor’s revision of the fiduciary rule. In 2016, an AARP official said that the advocacy group planned to assemble some members to act as “mystery shoppers” to see if advisors are complying with the DOL’s fiduciary regulation. And earlier this year, AARP, along with the North American Securities Administrators Association (NASAA), launched an online tool they designed to help individuals select a financial advisor.
The Labor Department has until April 30 to appeal the court’s decision. And, as was discussed at the recent NAPA 401(k) SUMMIT, there are a number of options that could yet play out.