FINRA Touts Participation in Remote Inspections Pilot Program
Commentary by Glen Barrentine
FINRA executives reported that 741 member firms volunteered to participate in FINRA's Remote Inspections Pilot Program.
In a blog post, FINRA Executive Vice President for Member Supervision, Greg Ruppert, and FINRA Head of the Office of Regulatory Economics and Market Analysis said that the 741 firms represent 22 percent of all FINRA member firms. They said opt-ins were highest among large firms, with a participation rate of 60 percent in this category, and mid-size and small firm participation rates are 47 percent and 18 percent, respectively.
The executives stated that the three-year Remote Inspections Pilot Program was designed to "evaluate the impact and efficacy of the remote inspection[s] of branches and offices by member firms." They said the Pilot Program "will allow FINRA to collect evidence of the effectiveness of remote inspections" and "assess whether remote inspections may be part of a modernized supervisory system that reflects the hybrid work environment and the availability of technologies that did not exist when the on-site inspection was conceived." (See related coverage.)
They announced that the deadline to opt-in to participate for Year 2 of the Pilot Program is December 27, 2024. Year 2 of the Pilot Program will begin on January 1, 2025 and end on December 31, 2025.
Commentary
The Remote Inspections Pilot Program participation rates released by FINRA actually suggest that many member firms that could benefit from the Pilot Program have chosen not to participate, at least in the pilot's first year. Possible reasons include a reluctance to undertake the required risk assessment or to prepare written supervisory procedures governing the conduct of remote inspections. In addition, firms may also be concerned about the requirement to report aggregate findings as well as a list of significant findings.