While the Financial Industry Regulatory Authority is increasing the number of on-site exams it conducts, examiners will spend less time on-site, according to FINRA officials. FINRA is also using a new method to determine which firms get on-site visits.
Michael Solomon, head of FINRA's national exam program, said on a recent FINRA podcast that on-site exams "ground to a halt" in March 2020.
However, as COVID began to recede last year, examiners "began to go on-site more frequently on our exams, and we're ramping that up pretty substantially this year," Solomon said.
Examiners are "taking a different tack, though," Solomon said.
Before COVID, "essentially every exam had an on-site portion, some longer than others," Solomon explained. "Now we're assessing each exam individually to determine what the utility is for going on-site based on what reviews we've scoped in on those exams, based on the risk or impact of the firm itself, or what we learned during the course of the exam may warrant us to spend some time on-site or if we think the exam may be more efficient on-site."
Said Solomon: "I think the days of us camping out at a firm for a week or two weeks, and then returning for a long period are behind us given the amount and the ability to obtain things remotely."
Back-to-Back Exams
Solomon reiterated that FINRA has consistently moved to a more risk-based exam program.
FINRA's Risk Monitoring counterparts that help determine exams "do a real-time assessment of all of our 3,400 firms to determine whether they're going to get an exam each year, whether they'll have one back to back or whether they'll be more spread out based on the risk of that firm and how they assess that firm," Solomon explained.
