FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProfessional Conduct and Ethical ConsiderationsMedium
A registered representative (RR) receives a complaint from a client via email, alleging that the RR misrepresented the potential returns of a mutual fund. The client states they are very upset and want to liquidate their investment immediately. What is the RR's immediate action regarding this complaint?
- AForward the email to the appropriate supervisor or compliance department for review and processing.
- BImmediately liquidate the client's mutual fund as requested to de-escalate the situation.
- CAttempt to resolve the complaint directly with the client via phone call to avoid formal documentation.
- DDraft a formal written response to the client, denying the allegations and explaining the mutual fund's true performance characteristics.
Show answer & explanationAnswer & explanation
Correct answer: A. Forward the email to the appropriate supervisor or compliance department for review and processing.
All written customer complaints, including those received via email, must be promptly forwarded to a supervisor or the compliance department for review and proper handling according to FINRA rules and firm procedures. RRs are generally not permitted to handle complaints independently.
Why the other options are wrong
- B. Liquidating the fund immediately without proper review could be detrimental to the client and may not resolve the underlying complaint.
- C. Attempting to resolve a written complaint informally and without supervision is a violation of compliance procedures.
- D. Drafting a response without supervisory review is inappropriate and could exacerbate the situation or lead to further compliance breaches.
Client Complaint Handling
The formal process for receiving, documenting, investigating, and resolving client grievances, typically involving escalation to supervisory or compliance personnel.
- All written complaints (including email) must be forwarded to a supervisor.
- Complaints must be documented and maintained for a specified period.
- RRs should not attempt to resolve written complaints independently.
- FINRA requires firms to establish and follow written procedures for complaint handling.
Memory trick: Email complaints, escalate fast, let compliance make it last.