FINRA Official Warns Firms Not to Cut Compliance Budgets
In a recent speech, FINRA’s EVP of Member Regulation Sales Practices, Susan Axelrod, warned members not to cut compliance expenditures. She said that cutting compliance spending or delaying the implementation of critical technologies “will likely cost more in the future.” Ms. Axelrod said that firms need to strengthen procedures around protecting customer accounts and information, vetting complex products, and ensuring suitability.
OUR TAKE: We have experienced exams where the regulators look for changes in compliance budgets from year-to-year. Based on our experience with firms and regulators, we believe that firms need to spend at least 5% of revenue on compliance.
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