RUS NFA Financial Product Standard
On Aug. 12, RUS NFA draft standard for sale of financial products.
- A draft internal standard establishing requirements for the sale of financial products.
- Developed to counteract the sale of some financial products under the guise of others.
- Covers sale (offer) of products under brokerage (dealer) activities, trust management activities, agent activities and offer of financial instruments belonging to professionals.
- The draft internal standard defines the basic principles for offering financial products.
- And requirements for interacting with individuals, methods for providing information.
- Information must not be misleading and should include product characteristics, risks.
- Principles of good faith, reliability and completeness apply to the information provided.
- The standard lists the financial products that are difficult for consumers to understand.
- Purchaser should be provided with passport regarding financial instrument, containing data about the product, information about its characteristics, risks and the expenses.
- The passport of a complex financial product is developed and updated by the issuer.
- When selling a product, an employee must not present as investment consultation.
- He must not comment, judge, evaluate, advise on suitability of the financial products.
- On the contrary, consultant must explain to the client it may not be suitable for him.
- RUS NFA invited comments and suggestions on the draft internal standard.
- The standard is a joint internal document, signed simultaneously by two Associations.
- The amendments made to it will also be agreed upon by the RUS NFA and NAUFOR.
- It will be monitored by RUS NFA Control Service and fines may be issued for violation.
- Mis-selling cases are also identified by RUS CB Consumer Rights Protection Service.
- Violation can be detected both by client’s complaint and during a routine inspection.
||B/D; Bank; Corp; Exch; Fiduciary; IA; IB
||Advertising; Complaints; Compliance; Financial; Operations; Reporting; Risk; Suitability; Trading; Treasury
||Banking; Corporate; Derivatives; Fixed Income; Forex; Fund Mgt; Securities
Last substantive update on 08/14/2019