This summary discusses the guidance FINRA has provided through Regulatory Notice 19-10[1] regarding communications firms should have with their clients when a registered representative departs through resignation or termination.
Background and Discussion
FINRA continues to prioritize the need for clients to make a timely and informed choice on where the client will move their assets, in the event that the client’s registered representative has left its current firm. FINRA expects firms to communicate to clients promptly on the departure of their representatives, how clients’ accounts will continue to be serviced and provide clients with timely and complete answers.
Registered Representative Departures
When registered representatives depart, they either move to other financial firms under various regulatory jurisdictions or leave the industry entirely. This departure prompts client questions about the representative’s departure and the status of client accounts. FINRA takes under consideration the different types of relationships clients have with their representatives and understands that some firms have flexibility in reassigning the client’s representative. FINRA emphasizes that the client should receive communication that is timely and provides complete answers.
Communications with Customers
FINRA expects that firms will have policies and procedures designed to ensure clients of departed representatives are aware of how their account will be serviced and how the firm intends to ensure client services are not interrupted.
Additionally, the procedures must include how the firm intends to provide communications regarding where clients can maintain their assets, where clients can direct trade instructions and provide a process on how the client can contact their former representative.
If you have any questions, feel free to contact NRS.