The Securities and Exchange Commission (SEC) will hold a roundtable this fall to publicly assess how brokerage and advisory firms have fared in developing and distributing their Form Client Relationship Summary (CRS), a mandate that went into effect on June 30 along with Regulation Best Interest.
The Form CRS was intended to provide brokerage and advisory clients with a streamlined and transparent summary of the relationship between customer and advisor, containing “plain English disclosures” on a firm’s offerings, fees, commitments and conflicts. After going into effect June 30, firms were directed to deliver the form to new, potential and current clients, as well as delivering it to the SEC and posting it on their website, if applicable.
As firms prepared to enact Reg BI and Form CRS compliance this year, they expressed numerous concerns about how the mandated brevity of the form made them difficult to write while including the necessary information (firms had two pages for their Form CRS, while dual registrants had four pages in total). Firms also bristled at the requirement that descriptions and disclosures must be in “plain English,” arguing that complicated language was sometimes necessary to accurately describe a part of the firm’s services.
Now, the SEC is reviewing submitted Form CRSs, and announced the roundtable as a venue to offer firms additional thoughts on this initial review (as of yet, the roundtable’s date and other information has not been released). To date, the SEC’s Staff Standards of Conduct Implementation Committee found many strong examples of well-constructed Form CRSs, according to the SEC.
“At the same time, the Committee’s initial reviews have identified examples that may lack certain disclosures or could be clear or otherwise improved,” the committee said in a statement. “Particular firms may need to consider ways to improve their relationship summaries and determine whether any specific amendments, or broader change in their overall approach, would be appropriate.”
In the meantime, the SEC suggested that firms consult with some additional guidance on the Form CRS, including the initial instructions and frequently asked questions about the form. The Commission had also previously released a risk alert from April that detailed what SEC inspections and examinations would be looking for when assessing compliance with Form CRS mandates.
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