The Department of Labor remains amenable to allowing commissionson lifetime income annuities, as well as the marketing ofproprietary annuity products, according to theleadership of the Insured Retirement Institute, which representsthe interests of insurance companies, among others.

In a press conference laying out the trade association’s 2016agenda, Cathy Weatherford, president and CEO of the IRI, and LeeCovington, IRI’s general counsel, said they remain confident theDOL is taking seriously the insurance industry’s concerns with theDOL’s proposed fiduciary rule, and therestrictions it would place on the sale of annuity products.

The rule is expected to be finalized in a matter of months.

Critics of the proposal have claimed its Best Interest ContractExemption provision would effectively outlaw commission-basedcompensation for retirement advisors and insurance brokers.

If accurate, that would impact the sale of variable annuities,fixed-income annuities and longevity annuities, among other incomegenerating products, which are largely sold on commission.

Read: Annuity innovation continues as industrybraces for DOL fiduciary rule

On several occasions, DOL officials have said the proposal doesnot outlaw commission-based compensation.

In fact, a DOL-produced fact sheet explicitly says as much: “No.The proposed regulatory package does not require advisors to moveto a fee-based business model.”

But “every ERISA expert we have consulted with says the rulebans commissions,” Covington said in the press call, pointing thatdiscrepancy out as the area of main disagreement between regulatorsand annuity providers.

Both Weatherford and Covington noted the string of regulatoryaction issued during the Obama Administration that aims to makelifetime income products more accessible to retirement investors asreason to believe the DOL won’t finalize a rule that restrictsannuities.

They also noted the scores of concerns raised by CongressionalDemocrats over the proposal, as well as Labor Secretary ThomasPerez’s numerous public promises to finalize a workable rule asfurther reason to believe regulators will finalize improvements tothe proposed BIC exemptions.

“We agree that financial advisors must act in the best interestof clients,” said Covington, who suggested a middle ground betweenthe DOL’s proposal and existing regulation of annuities.

Compensation should be reasonable, he added, echoing language inthe proposal.

But he also said further clarification is needed to define whatexactly is reasonable.

The DOL’s proposal limits reasonable compensation to the servicebeing provided by the retirement advisor, explained Covington.

A more balanced definition of reasonable compensation wouldinclude consideration of customary compensation, which takes intoaccount the fees and expenses of structuring the guarantees inannuity investments.

As proposed, “the rule provides a clear safe harbor forfee-based business,” said Covington. “Anyone that goes outside thatsafe harbor does so at their own peril.”

Middle ground also exists when it comes to the marketing ofproprietary annuity products.

“We’re very hopeful the DOL isn’t trying to ban proprietaryproducts,” added Weatherford.

As far as any action Congress make take to delay or replace therulemaking process, Weatherford and Covington said it is too earlyto tell.

“That will depend on what the final rule looks like,” saidWeatherford.

Click here for a copy of the IRI's PolicyAgenda.