NASAA Series 66 Uniform Combined State Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesEasy
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. This policy is primarily designed to ensure compliance with which of the following regulatory principles?
- AThe requirement to segregate client funds from firm assets.
- BThe duty of best execution for client orders.
- CThe supervision of agents and communications and the handling of customer complaints.
- DThe obligation to maintain adequate capital reserves.
Show answer & explanationAnswer & explanation
Correct answer: C. The supervision of agents and communications and the handling of customer complaints.
The immediate forwarding of all customer complaints to the compliance department is a key component of a broker-dealer's supervisory responsibilities. This ensures that complaints are properly reviewed, investigated, and resolved in accordance with regulatory requirements for handling customer complaints and supervising agent conduct.
Why the other options are wrong
- A. Segregation of funds relates to asset protection, not the process for addressing client grievances.
- B. Best execution relates to trade execution, not complaint handling.
- D. Capital reserves are about financial stability, not customer complaints.
BD Customer Complaint Handling
Broker-dealers are required to establish written procedures for the prompt and fair resolution of all customer complaints, including forwarding them to a designated supervisory or compliance department for review and action.
- Written procedures required.
- Prompt and fair resolution.
- All complaints (oral/written) must be addressed.
- Supervisory oversight is critical.
Memory trick: Hear it, write it, send it, solve it.