The Financial Industry Regulatory Authority (Finra) has launched an investigation into cross-selling practices by employees at brokerage firms.
The investigation seeks to assess the incentives that employees receive to promote bank products to broker-dealer retail customers through referrals or direct sales.
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The regulator said that it also seeks to examine incentives received by these employees to add features including securities-based loans, credit or debit cards, or checking accounts to broker-dealer retail customer accounts, and to open additional broker-dealer retail accounts for customers.
Finra expects firms to offer a description of the firm's cross-selling programmes, monetary and non-monetary benefits to employees related to cross-selling programmes, metrics used to assess employees' performance related to cross-selling programmes and the application of those metrics to performance ratings.
Firms are also required to provide a list of whistleblower, ethics, or other written, electronic or oral complaints related to cross-selling programmes, reviews by internal audit, consultants, law firms or other external parties in this regard, and reviews ordered by their parent companies to evaluate if they conducted illegal cross-selling programmes.
At the same time, the regulator also requires a list of employees terminated or disciplined for not meeting production goals or for engaging in improper cross-selling programmes.
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By GlobalDataThe firms will have a deadline of November 15 to offer the regulator the required documents.
