September 8, 2011 | Leave a Comment
- Regulation requires that the Advisor know (and retain) “essential facts” concerning every customer from the initiation of the customer-broker relationship. The essential facts are those required to:
- Effectively service the customer’s account,
- Act in accordance with any special handling instructions for the account,
- Understand the authority of each person acting on behalf of the customer, and
- Comply with applicable laws, regulations, and rules.
“The know-your-customer obligation arises at the beginning of the customer-broker relationship and does not depend on whether the Broker has made a recommendation.”
- Discussion of frequency of updating information on client: 36 month maximum between updates of account information for client.
The information provided above is a summary of FINRA Rule 2090 and FINRA Rule 2011 provided by Insurance Technologies. For full FINRA descriptions of the proposed rule changes, visit www.finra.org.
September 8, 2011 | 1 Comment
Insurance Technologies continues to monitor new and upcoming regulations within the financial service industry in order to enhance our product offerings to help our clients with compliance. Two new regulations proposed in 2010 by the Financial Industry Regulatory Authority (FINRA) that Insurance Technologies is watching are FINRA Rules 2090 (Know your Customer) and 2111 (Suitability). These new SEC approved FINRA rules are scheduled to be effective in 2012 and will have a strong impact on Broker Dealers.
FINRA Rule 2090 and Rule 2111 were created to govern suitability and know your customer obligations to ensure investor protection, fair dealing with customers and promote ethical sales practices. It is important for Broker Dealers to prepare for these upcoming rules and start implementing the necessary procedures to prepare their Advisors.
Insurance Technologies continues to collaborate with current Broker Dealer clients to identify the best practices to meet these regulations. Please contact us, to learn how Insurance Technologies sales solutions can assist your company in meeting these upcoming FINRA rules. Read more