FINRA reported6 some initiatives commonly undertaken by broker-dealers and investment advisers in preparing to comply by June 30, 2020 with Regulation Best Interest ("Reg BI") and the required brief relationship summary on Form CRS. These initiatives include:
- project teams, workstreams or working groups to lead and manage Reg BI and Form CRS compliance requirements;
- timelines, project plans, multistage review processes and contingency plans in making the necessary technology, delivery methodology and other updates;
- training and capacity building for staff and supervisors;
- list of gaps and changes that need to be addressed in developing new or amended policies and procedures or supervisory systems;
- written supervisory procedures with clear criteria to be used in determining whether a particular recommendation is in a customer's best interest;
- recalibrated systems, reporting and technology tools in identifying and developing supervisory system modifications;
- automated tools to track, limit, report and document existing conflicts of interest in systems, controls and products;
- reliance on existing or newly created conflicts committees to identify existing or potential conflicts of interest;
- updated compensation practices that address differential compensation triggered by certain product sales;
- account surveillance for excessive trading, unusual commissions and conflicts of interest;
- updated account documentation and customer disclosure forms;
- thoughtful use of the terms "adviser" or "advisor," depending on the registration status of the firm or its associated persons;
- limited time period for sales contests; and
- simplified and easily understandable Forms CRS and the procedures and timelines to deliver to retail investors.
Originally published May 28, 2020.
Originally published in REVERSEinquiries: Volume 3, Issue
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