Reg BI examinations have already started to take place. But what exactly does this mean for financial firms? In its recent podcast, Unscripted, FINRA staff discuss what a post implementation date world looks like for member firms and what FINRA has been doing to train staff to ensure a consistent approach to examining and enforcing the new rule across the organization.
So, what exactly should firms be focused on now that the Reg BI compliance date has passed? According to Meredith Cordisco, FINRA’s associate general counsel, it’s as simple as it sounds – firms need to be in compliance with Reg BI to the extent that they make recommendations to retail customers. And what that means, practically, is they should have updated their policies, procedures, and training to account for Reg BI.
“They should have made system changes to the extent necessary to account for the new standard and all of those things that Jim just mentioned, and they should have trained their reps, even if training is in a virtual setting now that we’re all home because of the pandemic,” said Cordisco.
Additionally, Jim Wrona, FINRA’s vice president and associate general counsel, was asked for clarification on how firms would be examined with this new regulation moving forward. Similar to the SEC’s stance, Wrona reassured listeners that a strong emphasis is being placed on firms’ making a good faith effort to comply.
“Look, the SEC put out risk alerts for both Reg BI and Form CRS,” said Wrona. “And one of the things that they emphasized is that they’re looking for a good faith effort to comply with Reg BI and Form CRS. And we put out a statement the next day that said that we were going to take the exact same approach, that we’re looking for good faith efforts to comply with Reg BI and Form CRS.”
Wrona also briefly discussed what FINRA has been doing over the past year to prepare. Most specifically, the self-regulatory authority says its been training staff on both understanding the regulation, but also their approach to audit firms consistently, no matter the firm’s structure or business location.
“We’re a large organization and there’s a lot of different firms, a lot of different geographic locations. There are different business models, different customer bases, different product lines and everything else, but we want as an organization a consistent approach… One of the other things we’ve done is to make sure that as issues arise through examinations that there is a central group that are kind of the experts at FINRA on Reg BI and on Form CRS, so those issues will get to that group, so that group will ensure that there is consistency among the organization and among the different examinations.”
To listen to the complete podcast, click here.
To read a description of Quest CE’s recently released Reg BI/Form CRS training course, click here.