The 5 Most Significant Compliance Issues in Financial Services

ThinkAdvisor recently published a list of the top 5 compliance headaches faced by advisors and BDs.

1. Mandatory Succession Planning Rules for RIAs, which could require advisors to “plan for market stress and other events that may prevent an advisor from serving its clients.” These new rules are expected by the end of 2015.
2. Form ADV – Form ADV is the uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities. It currently requires an advisory firm “to identify its website.” The proposed amendment would require an advisor to include any social media platforms it uses. To respond appropriately to this regulation, advisors will have to take stock of their reporting systems and assess how compliance-related data is stored and received. More on this at Institutional Investor.
3. Treasury’s AML Rules for Advisors –  This proposed rule would “require all RIAs to develop and implement a written anti-money laundering program, and as needed, report suspicious activity to FinCEN under the Bank Secrecy Act via Suspicious Activity Reports.” The financial services industry is focusing considerable time and expense on capturing data to meet regulatory requirements in reporting, risk management, and compliance. Gathering, enhancing, and reporting the required data from multiple applications to meet regulatory demands is a significant challenge.We recently addressed AML challenges in our webinar, “Leveraging Data to Meet Regulatory Requirements and Create Competitive Advantage“
4. BD Conflict of Interest Sweep – FINRA is asking BDs to answer 19 questions about their retail accounts from mid-2014 to July 2015 in writing by Sept. 18 “regarding conflicts of interest they have related to their compensation practices.” FINRA wants to know:
   1. “how compensation policies for registered reps and supervisors are reviewed and approved”
   2. “what role the board has, for both individual packages and the firm as a whole.”
   3. “how firms identify compensation-related conflicts of interest and the controls used to manage those conflicts”
5. DOL Fiduciary Rule – The Department of Labor wants to amend the definition of “fiduciary” and this is considered one of the largest changes to happen in compliance and regulation in this industry. It’s expected to occur in May 2016.

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