Annual Compliance Meeting: A Retrospective Review

FINRA initiated a retrospective review of the annual compliance meeting (“ACM”) requirement in April 2018. The findings were published on October 18, 2019 in FINRA Regulatory Notice 19-34Although the final assessment indicates that they are determined to maintain the ACM requirement without change, the Notice did provide additional guidance on fulfilling the requirements.

Rule 3110(a)(7) requires each Registered Person to participate, at least annually, in an interview or meeting which includes discussions on compliance matters relevant to their activities. Additionally, Supplementary Material .04 (SM .04) provides a degree of flexibility to the manner and form of these meetings. Above all, the goal of an ACM is to discuss compliance issues in order to remain current on applicable regulatory developments or changes in Firm policies.  FINRA’s assessment highlighted the below key themes:

The Annual Compliance Meeting is a Beneficial Component of a Firm’s Compliance Program

Stakeholders remained in favor of the required nature of the ACM. Why? The benefits of ensuring Representatives are informed and focused on compliance matters outweigh the cost and time to conduct them.

There is Flexibility in How a Firm May Conduct the Annual Compliance Meeting

FINRA encourages Firms to look at flexible options for delivery of the compliance meeting. SM .04 provides a variety of examples but is not intended to limit the possibilities of delivery as technology advances. The Firm must ensure that the flexibly allows for Representatives to ask questions and be given feedback where appropriate. Also, at a minimum, the mechanism of delivery must be able to track complete attendance.  

No Checklist of Topics to Discuss at the Compliance Meeting

FINRA does not offer additional guidance in this area and maintains that topics should relevant to the registered person. For instance, factors should include the business of the firm and its specific policies, procedures, and risks. While an exhaustive list of topics is not possible, FINRA provides resources to guide Firms in providing a variety of suitable topics to its Registered Representatives.

Potential for the Coordination of the ACM Requirement with Continuing Education Training Requirements

Lastly, the Notice mentions discussions with various regulatory and industry organizations to potentially coordinate continuing education (“CE”) training with ACM training. This is an ongoing effort by the organizations to assess the feedback received from firms and identify inefficiencies in the two requirements.

Please contact our office to learn more about our expert consulting in this area.   

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