FINRA Launches Phone Mediation

The lower-cost alternative is voluntary and open to cases involving claims of $50,000 or less

More On Legal & Compliance

from The Advisor's Professional Library
  • Registration Requirements for Investment Advisor Representatives (IARs) When individuals launch an advisory firm, they must avoid marketing themselves or the firm as investment advisors before they are properly approved and registered.  Otherwise, they are subject to severe penalties.  
  • Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIA’s failure to stay within the scope of the Section 28(e) safe harbor may violate the advisor’s fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients’ transactions.

The Financial Industry Regulatory Authority (FINRA) announced Wednesday that it has launched a pilot program offering parties in simplified cases pro bono or reduced-fee telephone mediation.

Participation in the pilot program, which began on Jan.15, is voluntary and open to cases involving claims of $50,000 or less, FINRA says.

“Telephone mediation is a lower-cost alternative, and would benefit dispute resolution forum users in many ways,” said Linda Fienberg, president of FINRA Dispute Resolution, in a statement. “Besides eliminating the travel and preparation costs typically associated with in-person mediation, telephonic mediation offers greater convenience and flexibility, and is a practical alternative for all parties involved.”

Parties interested in participating in the pilot can notify FINRA by visiting www.finra.org/arbitrationmediation/smallclaims. Also, FINRA says staff will notify eligible parties about the pilot program.

Mediators would serve on a pro bono basis on cases involving claims of $25,000 or less in damages. Reduced-fee mediation ($50 per hour) would be available on cases with damage claims between $25,000.01 and $50,000. FINRA says it will not charge any administrative fee for these cases.

Reprints Discuss this story
This is where the comments go.