FINRA to Mirror SEC Reg BI, Form CRS Exam Approach
Self-regulatory group says it will take action if it observes client harm or conduct violating current suitability rules.
The Financial Industry Regulatory Authority said Wednesday that it will take the same approach as the Securities and Exchange Commission when reviewing broker-dealers and their associated persons for compliance with Regulation Best Interest and the Customer Relationship Summary form.
FINRA, the enforcer of Reg BI, also emphasized that it will not ignore suitability violations.
The news comes a day after the SEC’s Office of Compliance Inspections and Examinations released two Risk Alerts detailing the scope and content of exams for compliance with Reg BI and Form CRS.
According to FINRA, its exam approach “will focus primarily on assessing whether firms have made a good faith effort to establish and implement policies and procedures reasonably designed to comply with Reg BI and Form CRS.”
“However, as always, FINRA will take action in the event FINRA observes indications of customer harm or conduct that would have violated current standards (e.g., suitability),” the self-regulatory group added.
FINRA also released a report on the common practices the regulator observed while conducting Reg BI preparedness reviews in 2019 and other ongoing conversations with firms.
SEC Chairman Jay Clayton announced April 2 that the agency would not extend the June 30 compliance date for Reg BI and Form CRS.