Regulation Best Interest Exams Among Top Exam Priorities for 2021

Posted on February 11th, 2021 at 11:12 AM
Regulation Best Interest Exams Among Top Exam Priorities for 2021

From the Desk of Jim Eccleston at Eccleston Law LLC:

The Financial Industry Regulatory Authority (FINRA) expects real progress in compliance policies and procedures around Regulation Best Interest.  FINRA’s 2021 goal is to expand the scope of Regulation Best Interest and Form CRS reviews and testing. The current changes attempt to create a more comprehensive review of firm processes, practices, and conduct.

FINRA's exam team will conduct more thorough reviews of how firms handle Regulation Best Interest and the new relationship summary document known as Form CRS. FINRA has outlined several other areas of concern, such as how firms are handling cybersecurity, variable annuities, and anti-money laundering programs. FINRA also warns of potential compliance issues that could come from novel digital communications.

FINRA also added a new item to its exam priorities list: Outside Business Activities (OBA) and Private Securities Transactions. FINRA has come across instances when registered representatives have received loans for an outside business activity under the federal Paycheck Protection Program (PPP) but had not previously disclosed those activities to their respective firms.

FINRA also expects firms to pivot their focus from monitoring for compliance to identifying gaps or lapses. FINRA’s new Form CRS is a reader-friendly document with an interactive format that firms can use to bolster their compliance programs. Firms should use the Form CRS as a roadmap to the resources they expect to devote to their compliance programs.

Eccleston Law LLC represents financial advisors nationwide. Please contact us to discuss any issues that you may have.

Tags: eccleston, finra, regulation, eccleston law

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