FINRA Strongly Suggests Actions on Business Continuity Plans
FINRA Rule 4370 requires member firms to create, maintain and annually review and, if necessary, update a business continuity plan (BCP) relating to an emergency or significant business disruption. FINRA recently published Regulatory Notice 21-44 (RN 21-44) setting forth its observations after reviewing firm BCPs resulting from the Covid pandemic.
Annual Testing. Rule 4370 doe not specify exactly what is to be done here. RN 21-44 suggested reviewing annually to include testing operations, business structure, and business locations.
Providing BCP To Customers at Account Opening. Member firms may meet by providing summary information about how the firm will address the [possibility of future significant disruptions, and may do so by using electronic media.
Triggering Events. While not required, FINRA indicated that including responses to a pandemic may be appropriate to include in a BCP.
Remote Work Arrangements. RN 21-44 suggested considering including in the BCP remote work arrangements.
FINRA Guidance. RN-21-44 lists a number of other Regulatory Notices and FINRA’s 2021 Report on Examinations and Risk Monitoring that firms may consider.