FINRA’s New Maintaining Qualifications Program adds Career Flexibility for Advisors

The Financial Industry Regulatory Authority (FINRA) has changed some of its rules on continuing education (CE) to help registrants who have stepped away from the industry retain their qualification for up to five years. By enrolling and keeping current on CE, FINRA-licensed professionals will have five years, instead of two, before their licenses expire.

The regulatory notice that detailed the amendments to Rules 1210 and 1240, said the changes would accommodate registrants, “particularly women and underrepresented minorities, whose personal circumstances take them away from the industry for a time.” The changes also require that registrants complete CE requirements on applicable regulation annually for each representative or principal registration category they hold.

Its new Maintaining Qualifications Program (MQP) is also a way for FINRA to update its criteria to fit current financial professional practices and provide flexibility and peace of mind for those who leave a FINRA-member firm.

The MQP can provide breathing room so that the impending two-year deadline for affiliating with a broker-dealer does not trigger the same stress cycle that is felt when making the decision to leave a broker-dealer. Its implementation should discourage advisors from making poor choices to keep their FINRA licenses, such as attempting to “park” them at a broker-dealer or seeking career paths based, in part, on their ability to meet the necessary requirements to maintain active licenses.

 

The Importance and Relevance of CE

FINRA has tweaked its overall approach to CE to meet the transformative needs of financial advisors and their clients. They’ve moved to an annual CE requirement for active reps in response to the rapid pace of change in financial industry rules and regulations.

FINRA said its adoption of an annual CE requirement would push registrants to remain up to date on regulatory changes, including the newest developments from a given previous year, and ensure registrants would get “more frequent assessments” on current issues.[1] As regulatory authorities, the objectives of FINRA and the U.S. Securities and Exchange Commission (SEC) are to protect investors. They can’t do so unless their licensed individuals and fiduciaries stay abreast of the latest rules and regulations.

The move to an annual requirement for active reps would augment the timeliness and relevance of the CE Regulatory Element, reduce firms’ regulatory risk, enhance compliance, and reduce compliance-related costs. The same benefits apply to the new MQP.

 

How the MQP Works

People can increase their flexibility by opting into the MQP when they terminate their registration with a FINRA-member firm. Those who have maintained their FINRA registration have the option of extending the time to requalification from 2 years to 5 years if they want to step away or affiliate with a non-FINRA member firm. Those who are becoming investment advisor representatives (“IAR”) without a broker-dealer affiliation will have more time to recommit as they explore other options, especially for those who need to step away from the broker-dealer industry.

If you enroll in the MQP, so long as you maintain your annual CE and follow the program requirements, you will have three additional years of time to explore different sectors of financial services, without having to retake the exams.

A call to action is needed for those who believe they can benefit from the MQP. Those who terminated in the last 12 months should have already received a postcard from FINRA giving them the opportunity to sign up. Broker-dealers should provide information to the registered representative upon separation. When your license is terminated, you have the option to participate in this program and must elect to enroll in the MQP at that time. If you don’t plan on coming back, you can opt out.

It’s essential to note that individuals are solely responsible for completing and staying on top of the CE that’s required to remain active in the program by Dec. 31 of each year for the five-year period. Don’t make the mistake of relying on your current or previous compliance team to do it for you. You and only you can ensure that the required CE is completed on time. It’s a form of self-compliance.

The main takeaway is that FINRA’s new MQP offers a way to keep your options open when contemplating life events or a career change. It’s welcome news for those affected by change in a rapidly evolving industry.

If you meet eligibility requirements and wish to enroll in the MQP, follow these steps:

  • Sign Up or Log in to FinPro: This is where you review your U4 and enroll eligible licenses, receive notifications from FINRA and track CE completion dates and status.
  • Complete Required Coursework: Individuals must complete all CE, both Firm Element and Regulatory content, annually by Dec. 31 of each calendar year they remain in the MQP. Coursework for the first year of the MQP will become available July 1, 2022.
  • Additional information can be found on FINRA’s website, or contact the call center at 301.590.6500 if your questions can’t be answered online.

The team at Core Compliance & Legal Services, In. SM (“Core Compliance”) can assist with not only assessing your firm’s protocols to developing a CE education plan for you and/or your firm, but other areas of compliance. For more information or assistance, please contact us here or at (619) 278.0020.

[1] https://www.finra.org/rules-guidance/notices/21-41

 

 

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