Today, the Financial Services Institute (FSI) released its white paper on outside business activities (OBAs). The white paper was written in conjunction with FSI Partner Law Firm sponsor Eversheds Sutherland (US) LLP and members of the FSI Compliance and Investment Advisory Services Councils. The white paper provides important benchmarking for independent financial services firms as well as helpful information on ways firms seek to identify undisclosed OBAs.
The release of the white paper is timely as FINRA is currently reviewing its OBA rule as part of its retrospective rule review process.
“By leveraging the insight of our members and applying the extensive experience of our partners, we can provide actionable common and innovative practices to help our members respond to common issues and pitfalls regarding outside business activities,” said FSI President & CEO Dale Brown. “We are proud to assist the independent financial services industry in developing greater clarity on the expectations of both FINRA and the states so our members can continue to allow their financial advisors to provide these crucial services while also ensuring compliance.”
The white paper found that OBAs play a unique role in the independent financial services industry in that they take a variety of forms and allow financial advisors to better serve the needs and demands of their clients, particularly those in more rural or sparse areas. It also outlines many of the extensive approval and monitoring efforts independent financial services firms use to comply with FINRA and state regulatory requirements related to OBAs.
FSI’s OBA white paper also contains useful reference information for firms, including:
- Case studies from 11 independent financial services firms,
- Helpful examples of ways firms are currently working to identify undisclosed OBAs,
- Various OBA-related enforcement actions.
Other findings include:
- Value of OBAs in the independent channel, both for financial advisors and for investors,
- Scope of outside business activity,
- Regulatory and compliance framework for OBAs, and
- Consequences for failing to comply with OBA regulatory requirements.
The findings in the paper were based on a survey of numerous FSI member firms.
About the Financial Services Institute (FSI): The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for more than 100 independent financial services firm members and their 160,000+ affiliated financial advisors – which comprise over 60% of all producing registered representatives. We effect change through involvement in FINRA governance as well as constructive engagement in the regulatory and legislative processes, working to create a healthier regulatory environment for our members so they can provide affordable, objective advice to hard-working Main Street Americans. For more information, please visit financialservices.org.
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