Client complaints can negatively impact Registered Investment Advisers (RIAs) for years to come. Examiners expect an RIA to enact policies and procedures detailing how the firm will address complaints. These policies and procedures should demonstrate that the adviser takes all client complaints seriously and will attempt to resolve them.
RIAs should formulate a definition of “complaint.” When an event occurs that falls within that definition, supervised persons must notify the Chief Compliance Officer (“CCO”) immediately. They must provide the CCO with all information and documentation in their possession relating to the complaint. Supervised persons must cooperate fully with the firm’s CCO, as well as with regulatory authorities who may be investigating the client’s complaint. Every complaint must be fully investigated by the RIA.
RIAs must keep books and records that show who filed the complaint, when it was received, who was involved, and what transpired. Firms should retain copies of all correspondence relating to the complaint. RIAs should hold onto documentation showing what action they took in regard to the complaint and their reasons for doing so. The party submitting the complaint should be notified promptly regarding the RIA’s decision.
An RIA’s policies and procedures should help to ensure that there is a prompt and equitable resolution of complaints. Depending upon the situation, it may be necessary for the firm to report the complaint to its errors and omissions carrier.
Policies and procedures should be designed to prevent complaints. When a complaint is filed, RIAs should consider revising their policies and procedures to prevent similar instances from occurring.
About RIA Compliance Group: RIA Compliance Group is an investment adviser compliance consulting firm based in Boca Raton, Florida. The firm’s mission is to provide affordable, timely, practical, and cost-effective compliance advice. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms. RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese. The firm interacts on a daily basis with SEC and state securities regulators.
RIA Compliance Group, LLC – 5301 North Federal Highway, Suite 380, Boca Raton, FL 33487 – Tel: 561-600-0564 – firstname.lastname@example.org