Brad Campbell Offers Insight on FACC’s Decision to Drop DOL Fiduciary Lawsuit

Benefits and executive compensation partner Brad Campbell spoke to ThinkAdvisor about the Federation of Americans for Consumer Choice’s (FACC) decision to drop its lawsuit against the Department of Labor (DOL).

The lawsuit, which had challenged the agency's 2020 guidance on who is considered a fiduciary when giving rollover advice, was “rendered moot” after the DOL vacated portions of the preamble to Prohibited Transaction Exemption (PTE) 2020-02.

Campbell explained that PTE 2020-02 allows variable compensation or commissions for non-discretionary advice if the financial professional and their financial institution both accept fiduciary status, make certain disclosures, follow conduct standards, and receive only reasonable compensation. He emphasized that the exemption itself is “not affected by the FACC litigation and has been widely used since 2020.”

Campbell also noted that in 2020, the DOL added “otherwise unrelated fiduciary rollover interpretive guidance” into the preamble to PTE 2020-02. He clarified that the guidance isn't needed to use the exemption, but that the DOL used the preamble as the vehicle to introduce it. "What the guidance did is explain — in a new way that materially changed things — how to apply each of the five factors of the 1975 fiduciary rule in the five-part test.”