NASAA Series 66 Uniform Combined State Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesMedium
A broker-dealer firm has established a policy that all customer complaints, whether written or oral, must be immediately forwarded to the firm's compliance department for review and resolution. This policy aligns with which of the following regulatory requirements?
- AThe requirement for prompt and thorough handling of customer complaints.
- BThe duty to disclose conflicts of interest.
- CThe rule against churning client accounts.
- DThe obligation to maintain client confidentiality.
Show answer & explanationAnswer & explanation
Correct answer: A. The requirement for prompt and thorough handling of customer complaints.
Regulatory bodies like FINRA and state Administrators require broker-dealers to have robust procedures for receiving, reviewing, and resolving customer complaints in a prompt and thorough manner. Immediately forwarding complaints to compliance is a key component of fulfilling this obligation.
Why the other options are wrong
- B. While important, this relates to disclosing potential biases, not the process for handling complaints.
- C. This is an unethical practice that complaints might allege, but it's not the regulatory requirement for handling the complaints themselves.
- D. Maintaining confidentiality is a general ethical duty, not the primary reason for a specific complaint handling policy.
BD Customer Complaint Handling
Broker-dealers are required by regulators to establish and maintain written procedures for the prompt and thorough handling, investigation, and resolution of all customer complaints, whether written or oral.
- All complaints, written or oral, must be addressed.
- Requires written procedures.
- Must be handled promptly and thoroughly.
- Supervisory personnel are typically involved.
Memory trick: Hear the complaint, follow the script, protect the client.