FINRA Rule 4513 defines a “customer complaint” as any grievance by a customer or any person authorized to act on behalf of the customer involving the activities of the member or a person associated with the member in connection with the solicitation or execution of any transaction or the disposition of securities or funds of that customer. Customer complaints that are made in person or over the phone are not within the scope of this rule, however, it is still prudent for members to address these complaints so that they do not escalate further.
If a complaint is resolved to the satisfaction of both the member firm and the customer, no further action is needed. In the event that it cannot be resolved, it must be referred to the director of arbitration of FINRA. If the complaint involves allegations of theft, misappropriation of funds or securities, or forgery, the member must promptly (not later than 30 days) report this to FINRA.
Following Up on A Customer Complaint
If a written customer complaint is received, FINRA requires that the member firm take the following actions:
- File the complaint with FINRA no later than 30 days from the date it is received by the member firm
- Include a copy of the customer complaint, along with a detailed timeline of the actions taken by the member firm to research and resolve the issue (the issue need not be resolved at the time of filing)
- FINRA also requires member firms to file a quarterly report of all written customer complaints received, including status updates for those previously filed
Recordkeeping of Complaints
FINRA Rule 4513 states that copies of all customer complaints be maintained in a file at the supervising OSJ. However, the rule does permit a member to keep a complaint file at the office where a complaint originated, if it chooses, rather than keeping them all at the OSJ. Each complaint in the file must be accompanied by a statement of its resolution and be endorsed by a principal. Member firms must electronically file information on all customer complaints with FINRA. These filings must be made within 15 days of the end of each calendar quarter.
Copies of customer complaints, as well as the quarterly filings, must be retained for four years. All customer complaints must be submitted to FINRA whether resolved amicably or not. FINRA staff will determine whether or not a complaint should be appended to the representative’s record and disclosed on BrokerCheck.
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