The CFP Board submitted an amicus brief on Wednesday to the U.S. District Court for the Eastern District of Texas in defense of the Department of Labor’s Retirement Security Rule.

The court is currently hearing a case, filed in early May, by the Federation of Americans for Consumer Choice, which challenges the legality of the rule that applies fiduciary standards to one-time retirement advice, such as rollovers and annuity sales. A separate case is being heard by the Northern District of Texas challenging the same rule.

The CFP Board, which has been a supporter of the new rule, argues in the brief that the rule is legal and will not harm consumers or reduce access to retirement investment guidance or products.

Industry players have argued, including in a study looking to assess the cost of implementing, that the rule will increase compliance costs and thereby limit access to insurance products by moderate-income investors.

In the brief, the CFP Board rebuts that argument, writing: “The reality is that insurance agents also will be able to serve all types of clients under the DOL Retirement Security Rule, but will not be able to act on their unbridled conflicts of interest and take unfair advantage of their clients.”

The CFP Board also explained that it has used a fiduciary standard for their members in 2018, and very few financial planners have increased their account minimum requirements due to upholding those standards. Similarly, the Securities and Exchange Commission’s Regulation Best Interest, which requires a best interest standard for securities recommendations to retail clients, did not dramatically reduce access to advice, the brief argues.

“Insurance industry advocacy groups have filed this litigation seeking to prevent the U.S. Department of Labor (“DOL”) from aligning the requirements for advice on retirement investments with the reasonable expectations of investors in its Retirement Security Rule,” the CFP Board wrote.

Instead of hindering access, the final rule will close important regulatory gaps, the brief argues. It would close the one-time advice loophole, cover non-securities that are left unregulated by Reg BI, and protect small plans receiving advice since they are not technically retail investors under the protection of Reg BI.

The DOL’s rule attempts to cover retirement investment advice offered by professionals who have a relationship of trust and confidence with their client. The brief notes that insurance agents do not disclaim such a relationship to their clients by saying “we do not have a relationship of trust. This means you should make your own determination and not place trust in me,” or “the fact that I am urging you to buy a product does not mean that the product is in your best interests.”

Leo Rydzewski, the general counsel of the CFP Board, in an interview with PLANADVISER, says he “overwhelmingly supports the approach,” taken by DOL, which will mitigate the “enormous gaps in regulation” that exist currently.

Rydzewski explains that rollovers and annuity purchases “are among the most significant financial decisions a consumer can make,” and they “expect and believe it should be in their best interest.”

The CFP Board has advocated for this rule for many months, testifying before Congress and the DOL in its support. It also published a report highlighting the differences between its code of ethics and the National Association of Insurance Commissioners’ Model Regulation, adopted by over 40 states, which the insurance industry has put forward as an alternative to the DOL’s rule.

Rydzewski characterized the NAIC Model Regulation as “a weak rule” and “not a real best interest standard” because it does not consider compensation as a potential source a conflict, perhaps the most common criticism of the NAIC rule, because “the greatest conflict you might have is your compensation.”

The NAIC and others in the insurance industry have argued that the state regulations are working, and have noted that more states may come under the NAIC umbrella in the future.