In response to the widespread adoption of remote work during the pandemic, FINRA, the U.S. Financial Industry Regulatory Authority Inc., is undertaking rule revisions to enhance supervision of representatives working from home.
With the implementation of Covid-19-related public health measures in 2020, FINRA temporarily eased registration and supervision requirements for home office ‘branches’ in the industry.
The U.S. Financial Industry Regulatory Authority Inc. (FINRA) is now looking to modify its regulations to acknowledge the enduring nature of remote work, independent of the pandemic situation.
The proposed amendments aim to allow firms to treat a representative’s home office as a non-branch location, subject to specific safeguards and limitations. This entails adjusting inspection frequency from annual to every three years.
Following an initial comment period, FINRA has made revisions to its original proposal in response to concerns raised. These revisions aim to provide clarity on the eligibility criteria scope and mandate firms to conduct and document risk assessments for each office before designating it as a “residential supervisory location” (RSL). The risk assessment should consider a comprehensive list of factors.
By introducing the requirement for risk assessment and accompanying documentation, FINRA believes it will enhance supervisory controls, offering investors greater protection.
Before the proposed rule changes can be implemented, they need approval from the U.S. Securities and Exchange Commission (SEC).
