Top Takeaways from the 2018 FINRA Conference

Each year, the FINRA annual conference brings together a diverse network of compliance professionals and provides them with the opportunity to discuss the latest regulatory developments and FINRA priorities. The 2018 conference, held May 21 – 23 in Washington DC, was no exception. This year’s conference hosted 150 speakers and attracted more than 1,600 industry professionals.

Over the course of the three action-packed days, conference attendees were able to engage in over 50 sessions which provided practical guidance on today’s top compliance issues. As an exhibiting vendor, we would like to thank all of our clients and partners that stopped by the Quest CE booth!

If you were unable to attend, below are some highlights from the conference.

SIE /Exam Restructuring

A big topic at the FINRA conference was the implementation of the Securities Industry Essentials (SIE) exam, taking effect October 1, 2018. The program is being restructured to 1.) reduce duplicative testing of general knowledge when taking exams to register in multiple categories and 2.) make it easier for individuals to enter the securities industry. The new “entry-level” exam is different in that individuals will not have to be sponsored by a broker-dealer to take the exam. The Essentials exam will serve as a prerequisite for several FINRA registration categories, including the Series 7 and 79, as well as the Series 6, 22, 57, 82, 86/87 and 99. FINRA intends to also retire seven registration categories in October. For a comparison between current and future representative-level qualification exam requirements, click here.

Regulation Best Interest

In a keynote address, Brett Redfearn, the SEC’s Director of the Division of Trading and Markets, addressed criticism of the Regulation Best Interest (Reg BI) proposal. Since its debut in April, many people have commented that the term “best interest” lacks a clear definition, which Redfearn said is purposeful.

“Best interest means what it says: You must act in the best interest of your client and not put your own interest in front of theirs,” said Redfearn. “Beyond that, it is a facts-and-circumstances determination, not a check-box compliance exercise. It analyzes the reasonableness of the match between the recommendation and the needs of the retail customer.”

Member firms have until August 7, 2018 to comment on the proposal.

CRD Transformation

Another hot-topic discussion was FINRA’s session on Web CRD’s Registration and Licensing Transformation. FINRA outlined its multi-year initiative to increase the utility and efficiency of the registration and disclosure process for firms. Currently, FINRA has 90 firms in a pilot program with the first phase of the transformation taking effect July 30. FINRA highlighted changes to be expected next month and provided a teaser of what’s on the horizon. The expected completion of the project is slated for 2021. For more information about the registration system transformation, click here.

The #MeToo Movement

It seems like every boardroom is taking notice of the #metoo movement and the financial services industry is no exception. Throughout the conference, compliance staff, industry practitioners and regulators alike addressed the need for firms to revisit their training, policies and procedures surrounding sexual harassment in the workplace.

Protecting Seniors (Under FINRA Rule 2165)

In light of FINRA Rule 2165, which took effect earlier this year, FINRA held a session devoted to senior suitability, financial exploitation and the new trusted contact requirement. During the discussion, a FINRA panelist acknowledged the difficulty firms have in identifying exploitation and diminished capacity, stating “When you get your series exam, we understand that you did not graduate as a psychologist or socialist, but there are signs we can all look out for.”

During the session, attendees were asked to participate in a live poll which asked if they have “experienced pushback from customers who refuse to designate trusted contacts?” Of those that responded, 63% of the audience said yes. Attendees were additionally asked whether they have “paused disbursements of funds to a customer under FINRA Rule 2165?” to which 49% said yes, 29% said no and 23% said they didn’t know.