Amy Lynch weighs in on new FINRA priority to monitor firms switching customers to fee-based accounts (AdvisorHub)

Amy Lynch, Founder and President - FrontLine Compliance
Amy Lynch, Founder and President – FrontLine Compliance

One of the new priority areas in FINRA’s recently released annual Regulatory and Examination Priorities Letter suggests there will be increased oversight of firms whose reps switch customers from a brokerage account to an investment adviser, fee-based account. Founder and President Amy Lynch, exclusively quoted, believes this signals that firms should do extra surveillance around the timing of transactions to determine whether a switch to a fee-based account disadvantages the customer. Ms. Lynch describes the situation where firms have the mandate to promote fee-based accounts to meet compliance with the DOL Rule without fully considering how the transition may negatively impact the customer.  See AdvisorHub, “FINRA Bearing Down on Securities-Backwed Loans and Rollovers.” The SEC, in a November 2017 report, also stated it will have a continuing larger focus on harm to retail customers. See our ComplianceAlert, “SEC Issues FY 2017 Enforcement Report and Priorities.”