More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
Harmonization of advisor and broker rules is an issue that’s “lower on the totem pole” for the Securities and Exchange Commission now, Duane Thompson, who runs his own consulting firm and serves as senior policy analyst with fi360, said Thursday. However, there are clearly areas where harmonization needs to occur.
Thompson, speaking at a forum held by MarketCounsel, a regulatory consulting firm, also said he doubts that a self-regulatory organization bill will pass this Congress. As Thompson reminded attendees, the SEC, under Dodd-Frank, has the authority to harmonize the rules for advisors and brokers without going to Congress for approval, but, as it stands now, harmonization is not a “front burner” issue for the SEC.
But both Thompson and Joe Borg, director of the Alabama Securities Commission, said at the forum that advertising is one area that deserves harmonization. For instance, broker-dealers can air their client testimonials, whereas advisors cannot, Thompson said.
Borg said that if there is an SRO set up and the Financial Industry Regulatory Authority (FINRA) gets oversight of state registered advisors, he’d like to see FINRA report to something like a “council of state regulators.” Says Borg: "The issue is who oversees FINRA with regards to policies, procedures, rules etc. If the SEC does not have jurisdiction in that arena it should be the states, as I believe an SRO should have government oversight by the appropriate government regulator."
Brian Hamburger, MarketCounsel’s CEO, commented at the forum in Coral Gables, Fla., that in the debate over how to minimize investor confusion about whether they are dealing with a broker or advisor—which Borg added continues to be a major issue for consumers in his state–the United Kingdom’s Financial Services Authority (FSA) has told advisors and brokers that come 2013 they must clearly state whether they are fee-based or commission-based, Hamburger said. The UK FSA has said, each must go to “their respective corners” in order to minimize investor confusion.
SEC Chairman Mary Schapiro along with the agency’s senior staff met with UK FSA’s CEO Hector Sants and its managing director on Thursday, in what the SEC called an ongoing “strategic dialogue” between the two agencies about regulatory approaches to current issues.
Said Schapiro in announcing Thursday’s meeting: “The ongoing dialogue between the SEC and the UK FSA demonstrates both agencies’ commitment to aligning interests with the goal of achieving regulatory consistency.”