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New FINRA Change to Exam Schedules: What Does This Mean for Small Firms?

Tuesday, August 13, 2019

No broker-dealer or investment adviser enjoys spending money on compliance. Let’s face it; it’s an investment that normally doesn’t improve returns. Although a challenge for smaller firms with minimal compliance budgets, FINRA’s new change in exam schedules makes it worth a conversation to spend (dare we say invest) more in compliance resources. 

Loosening regulations?! It’s almost unheard of and generally happens only when regulators have budget shortfalls. Fortunately, many small broker-dealers, who don’t show a history of being a danger to society, will receive an early Christmas present this year. Beginning with the next cycle of examinations, FINRA will start using more of a risk-based approach to its examination cycle. This change means examination schedules for smaller firms with no issues, should go from every two to three years, to every four years. That spend in compliance is starting to sound like a decent investment to improve future examination schedules. 

While there’s no way of knowing how long this reprieve will last, everyone in the industry should be on their best behavior so as to not have this new “privilege” taken away.  What are a few key items that you or a compliance resource can do? 

  • Review your current compliance systems to make certain they meet your needs
  • Identify any gaps that will leave you unprepared if and when an audit takes place 
  • Ensure your existing processes are effective and efficient for your needs 

For more on compliance and key topics, check out FINRA’s resources for small firms. 

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.