Regulation of the financial services industry can be quite tedious, labor-intensive, and burdensome.
We’re not telling you anything you don’t already know.
One thing that makes regulatory compliance tedious is its cyclical nature and the fact that we must continue to learn new skills and apply new regulations while at the same time keeping up with the existing rules.
With the end of 2021 and the beginning of 2022 upon us, there’s no time like the present to ensure all compliance policies and procedures are in good order. Then, when new rules and regulations are rolled out, you can feel comfortable that your existing responsibilities are well in check.
Below are a few key matters we recommend compliance professionals keep on their review and housekeeping list as one year ends and a new one begins:
Many firms are diligent about providing the form to new clients. However, it’s also important to recall that the Regulation Best Interest rule requires Form CRS to be delivered to existing clients when the firm takes certain actions.
It also gives advisers the ability to pay social media influencers to act as promoters.
However, firms would be unwise to boil this rule down to those two key points only and forget the requirements that go along with it.
There are certain measures to be taken and risks to be evaluated when a firm decides to use testimonials or partner with promoters. Be sure and review the Rule in full before jumping in with both feet.
This new piece of regulation, a leftover from the 2015 Rule, requires certain disclosures to be made in writing to plan participants under certain conditions. Failure to comply will cause the adviser to be in violation of its fiduciary duty to its client and most likely result in some type of regulatory action.
It goes without saying that it is crucial to be familiar with all rules under which one operates. However, at the same time, the new rules are top of mind for both regulators and firms (or they should be!).
We anticipate that regulators will be on alert for the issues mentioned above and prepare to enforce them. Many firms have sales goals top of mind as the new year kicks off, but we’d suggest that taking some additional time to ensure compliance is in order will stand you in good stead for the year, and the 2022 examinations, to come.