A-Team Insight Blogs

No Grace Period For Reg BI Compliance

Share article

For US-regulated firms affected by the upcoming Regulation Best Interest (Reg BI) and concurrent Customer Relationship Summary (Form CRS), due to come into force on June 30, 2020, the pressure is on to comply – and it is looking as if the regulator has no plans to go easy on its targets.

The 2020 Examination Priorities document from the SEC’s Office of Compliance Inspections and Examinations (OCIE), released last week, warned that although the regulator was happy to engage with broker-dealers during examinations on their progress on implementing the new rules and answer questions they may have regarding the new rules prior to the deadline, after June 30 it intends to begin assessing compliance immediately, with no grace period.

“After the compliance dates, OCIE intends to assess implementation of the requirements of Regulation Best Interest, including policies and procedures regarding conflicts disclosures, and for both broker-dealers and registered investment advisors, the content and delivery of Form CRS,” says the SEC. The document also confirms that Reg BI and Form CRS will be 2020 examination priorities.

Reg BI was voted in by the SEC last year as part of an ambitious investment advice reform package. The new rules substantially upgrade existing suitability regulations to raise the standard of conduct for US-based broker-dealers, imposing rigorous new requirements to ensure firms are transparent and act in their clients’ best interest.

On Monday, the SEC-controlled Financial Industry Regulatory Authority (FINRA), which regulates brokerage firms doing business with the public in the US, also released its 2020 Risk Monitoring and Examination Priorities Letter. The outline follows the SEC with a new focus on Reg BI and Form CRS. In the first half of the year, FINRA plans to review firms’ preparedness for Reg BI to gain an understanding of implementation challenges they may face. After the June 30 compliance date, FINRA will examine firms’ compliance with Reg BI, Form CRS and related SEC guidance and interpretations.

“FINRA continues to identify new ways to provide firms with information they can use to assess and strengthen their compliance, supervisory and risk management programs,” says FINRA CEO Robert Cook. “To that end, this year’s Priorities Letter includes a list of practical considerations and questions that firms may use in evaluating these programs.”

Leave a comment

Your email address will not be published. Required fields are marked *

*

Related content

WEBINAR

Recorded Webinar: Overcoming the Barriers to Implementing RegTech Solutions: The View from Either Side of the Fence

RegTech holds the promise of targeted, agile and often low-cost solutions to the real-world problems faced by financial institutions across the board. So why is it so difficult to get RegTech projects off the ground? RegTech solutions providers complain that it’s difficult to get access to decision-makers, and even when they do it’s tough to...

BLOG

Trade Body Calls for Stronger FinTech Regulatory Framework

While the UK has set the global standard for an effective and supportive approach to FinTech regulation, as the sector matures, change is needed to help launch more firms successfully into the global market, according to a new report from financial services trade association TheCityUK. Regulatory hurdles remain a barrier and difficult to understand within...

EVENT

RegTech Summit Virtual

We’re thrilled to introduce you to our new RegTech Summit Virtual event. Yes that’s right, all the fantastic content shared by A-Team’s unique community of practitioner experts that you’ve come to know and love from our RegTech Summit live events in London is now going to be made available to you online, so you can watch or listen at your leisure – whether that’s in your office, on your commute, or from the comfort of your own home.

GUIDE

Entity Data Management Handbook – Sixth Edition

High-profile and punitive penalties handed out to large financial institutions for non-compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations have catapulted entity data management up the business agenda. So, too, have industry and government reports on the staggering sums of money laundered on a global basis. Less apparent, but equally important, are...