The National Society of Compliance Professionals (NSCP) has submitted a comment letter to FINRA in response to its Regulatory Notice 25-04, which sought industry input on how the self-regulatory organization could modernize its rules and regulatory approaches.

The letter suggested that FINRA view compliance personnel as partners with shared objectives. Reflecting on feedback from NSCP members, the letter urges FINRA to implement a principles-based framework that supports investment adviser and broker-dealer compliance officers as they create programs to tackle an increasingly complex regulatory landscape.

To achieve this goal, the letter asks FINRA to consider several requests:

• Consider input on new rules early in the process, especially from compliance officers and other stakeholders.
• Minimize ambiguity of rule requirements and expectations, while allowing flexible rule implementations in practice.
• Allow sufficient time for rules to be implemented so their impact can be assessed, and compliance policies can be implemented.
• Avoid redundant and overlapping rules and consider creating safe harbors for compliance with overlapping obligations, and refrain from creating compliance responsibilities that diverge from SEC regulations and guidance.
• Accurately take stock of the cost of rule compliance and ensure that it is outweighed by benefits.
• Ensure that liability is assigned to the appropriate business line partners. To this end, the NSCP referred FINRA to its Firm and CCO Liability Framework, which analyses the effects perceived CCO liability has on the compliance profession.

Concurrent with the announcement of its letter to FINRA, NSCP also unveiled a mapping tool for broker-dealers and investment advisers, which plots a comprehensive view of the rules and regulations for which they are responsible. The tool is currently available for NSCP members, but a full release to the public is expected in the coming months.

“We believe that regulatory oversight is most effective when compliance professionals are treated as partners in achieving our shared goals – investor protection, market integrity, and the promotion of capital formation,” said Lisa Crossley, NSCP Executive Director.

“Our comment letter encourages FINRA to modernize its rulemaking process in a way that recognizes the real-world responsibilities of compliance officers and supports them in building effective programs tailored to today’s complex regulatory environment,” she said.