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June 15, 2020 at 01:31 PM
The Financial Industry Regulatory Authority is adding two new “problem codes” when reporting customer complaints related to the Securities and Exchange Commission’s Regulation Best Interest and customer relationship summary, or Form CRS.
The effective date for Reg BI and Form CRS is June 30.
Starting on July 18, firms will be able to use Problem Code 16–Reg BI and new Problem Code 17–Form CRS, when applicable, to report customer complaint information and required documents filed under Rules 4530(f) and (g), FINRA explains in Regulatory Notice 20-17.
FINRA says that the regulator is also retiring Rule 4530 Problem Code 69–DOL Fiduciary Rule and making other non-substantive stylistic changes to the problem codes.
Firms should use Problem Code 16–Reg BI when a reportable matter involves allegations concerning possible violations of Reg BI. “This encompasses allegations that recommendations of securities or investment strategies involving securities, including recommendations of account type, made to retail customers were not in the best interest of the retail customer,” FINRA states.
FINRA says that it’s also revising Problem Code 04–Suitability to help guide broker-dealers’ use of that code after the Reg BI compliance date, “especially considering that the reporting obligation under FINRA Rule 4530(d) and the choice of problem code are based on the alleged activity in the complaint.”
