Financial Services Institute: OneVoice 2014

Building a constructive relationship with regulators

  • Published: January 28, 2014
  • Runtime: 2:47
Financial Services Institute President and CEO Dale Brown sounds off on his group's wish list from FINRA, including a fairer arbitration process, clearer examinations and greater transparency in how they govern themselves.

The Financial Services Institute's annual broker-dealer conference, taking place January 27-29 in Washington, D.C.

One of the things we did very early on 10 years ago when we formed FSI is said we've got a-- we've got a bill to constructive working relationship with our principal regulator. At that time, it was in NASD, now FINRA. We're building on that constructive relationship now to focus on some specific areas where we think they'll improve in their ability to protect investors and make the regulatory environment more effective for our members. We like to see FNRA implement a robust and effective cost benefit analysis. The good news there is early in 2013 they announced they were hiring a chief economist. We've worked to cultivate a good relationship with him as he is building out that capability. The arbitration process needs some significant change in reform so that it continues to be a fair forum for investors who have complaints, but it's also a fair forum for industry participants. Tremendous opportunity to improve their examination process, so there's clarity of the expectations so that the rules are the same from district to district and applied the same way from district to district. And then finally, I think FINRA would benefit from greater transparency in how they govern themselves, how they spend FINRA members' money. And to their credit, they have listened to our concerns in all of those and have taken some, I think, constructive steps in every one of those areas right now. We've been working for a long time to try to get in place a permanent fix so that our members are not on a-- under a potential cloud of the IRS coming in and questioning whether or not their advisers are appropriately classified as employees or independent contractors. We believe very strongly we have a long history and track record where they are clearly independent contractors who meet all of the rules. So, one of the things we've been able to do with the last few years is move from playing defense from opposing bills that we think don't solve the problem or create other unintended consequences. Now, we're working on offense. We're trying to find a way to get a permanent fix in place. It's unlikely-- Given the current political environment, it's unlikely that we'll see success in that in 2014, but we're working to lay the foundation and groundwork for success in future congresses.

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