FINRA Plans Reg BI 'Preparedness' Exams
The regulator will assess firms' Reg BI compliance status as the deadline approaches.
The Financial Industry Regulatory Authority plans to conduct “preparedness” exams on broker-dealers to assess their compliance with Regulation Best Interest, according to the self-regulator’s CEO, Robert Cook.
At FINRA’s Senior Investor Protection Conference in Washington on Tuesday, Cook said that “as we get closer to the [Reg BI] deadline, we will be building into the scope of some of the reviews that we’re doing … a conversation about how’s a firm getting ready to comply [with Reg BI].”
He continued: “We just want to make sure we understand what some of the challenges that firms are facing at this stage and where they might be needing more guidance.”
After assessing BDs’ Reg BI compliance status, Cook said, FINRA will be prepping for Reg BI exams by “working closely” with the Securities and Exchange Commission.
Reg BI’s compliance date is June 30, 2020.
“We want to make sure that the exams are embodying the same general approach, and to that extent, talking about making sure examiners are comparably trained,” Cook said. “So there’s a lot of coordination on the exam front with the SEC.”
Cook also said that FINRA plans to “move forward in the near future” in filing a rule proposal with the SEC on FINRA’s suitability rule and “how it interacts” with Reg BI.
Bob Colby, FINRA’s chief legal officer, said Oct. 21 that FINRA would not eliminate its suitability rule in light of Reg BI, and planned to submit to its board shortly a rule proposal on sales contests and FINRA’s suitability rule “to conform them to Reg BI.”
“We’re not going to get rid” of the suitability rule — Rule 2111 — Colby told attendees at the National Society of Compliance Professionals’ annual meeting in Baltimore.
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