News & Insights

Finra Issues Guidance On Communications With Customers Regarding Departing Registered Representatives

FINRA recently issued Regulatory Notice 19-10 presenting FINRA’s policy and guidance on how broker dealer firms should guarantee all communications with customers be fair, balanced, and not misleading, as required by FINRA Rule 2210, in the event of a registered representative’s departure.

The Notice states that when faced with the departure of a representative, firms are to “promptly and clearly” inform affected customers how their accounts will continue to be serviced.  Firms are also required to provide “timely and complete answers, if known” and “communicate clearly, and without obfuscation” when customers ask questions about a departing representative.

The Notice clarifies that if asked, firms should explain that the customer has a choice to retain his or her assets at the current firm and be serviced by the newly assigned representative or a different representative or transfer the assets to another firm.  Firms should also, if asked, offer reasonable contact information of the departing representative, such as phone number, email address, or mailing address.  However, firms are not required to seek the departing representative’s contact information if not known by those responsible for reassigning and continuing to service the account at the time of the customer’s question.

We recommend our brokerage firm clients have policies and procedures in place to ensure notice to customers of departing representatives are made timely, provide clear information about how their accounts will continue to be serviced and provide clear and complete responses to questions regarding the departing representatives.