On November 17th, FINRA announced the adoption of important amendments to its continuing education (CE) rules. These changes will affect individuals with representative or principal registrations, such as the Series 7, Series 24, Series 79, and Series 82. Some of the changes go into effect as soon as March 15, 2022, while others become effective on January 1, 2023.
FINRA’s current CE program consists of a Regulatory Element and a Firm Element. The Regulatory Element focuses on regulatory requirements and industry standards and must be taken every three years by registered individuals. The Firm Element is provided by each firm to its registered persons yearly, and covers the firm’s securities products, services and strategies, policies, and industry trends. Currently, the FINRA CE program does not allow individuals to maintain terminated qualifications by completing CE. Instead, individuals must requalify by examination if they have not reregistered within the two-year qualification period.
The upcoming changes to FINRA CE are outlined in Regulatory Notice 21-41, which states that the changes to Rules 1210 and 1240 will: “(1) provide eligible individuals who terminate any of their representative or principal registration categories the option of maintaining their qualification for any terminated registration categories by completing annual CE through a new program, the Maintaining Qualifications Program (MQP); (2) require registered persons to complete CE Regulatory Element annually for each representative or principal registration category that they hold; and (3) expressly allow firms to consider other required training toward satisfying an individual’s annual CE Firm Element and extend the Firm Element requirement to all registered persons.”
Changes to Regulatory Element
There will be several changes to the FINRA CE Regulatory Element, effective January 1, 2023. Instead of every three years, registered individuals will have to complete CE every year by December 31st. In addition, individuals must complete CE content for each registration category they hold. Another change is that failure to complete the Regulatory Element by Dec. 31 will result in a CE inactive status. However, if “good cause” is shown, FINRA reserves the right to extend the deadline.
The initial annual Regulatory Element completion date will depend on an individual’s registration status:
The initial completion date will be Dec 31, 2023 if…
- An individual’s registration status stays the same after Jan 1, 2023, and the individual has completed Regulatory Element in 2021 under the current requirements.
- An individual reregisters in 2023 for a registration category without having done one of the following: completed Regulatory Element for that registration category in 2023, passed an exam for that registration category, or obtained an unconditional exam waiver for that registration category.
On the other hand, the initial completion date will be Dec 31, 2024 if…
- An individual reregisters in 2023 for a registration category after having done one of the following: completed Regulatory Element for that registration category in 2023, passed an exam for that registration category, or obtained an unconditional exam waiver for that registration category.
- An individual registers in 2023 for the first time for a registration category after having passed an exam for that registration category or obtained an unconditional exam waiver for that registration category.
Changes to Firm Element
Also, effective January 1, 2023, the annual Firm Element CE requirement is being extended to include all registered individuals, not just “covered registered persons.” Covered registered persons include registered persons who work with customers, who are registered as research analysts, and individuals who supervise such persons. Starting in 2023, all registered persons will be required to complete the annual Firm Element CE.
Another rule amendment includes allowing training related to the anti-money laundering compliance program under Rule 3310(e) and annual compliance meeting under Rule 3110(a)(7) to go towards satisfying an individual’s Firm Element CE requirement.
New MQP Program
FINRA says that to better accommodate registered persons, “particularly women and underrepresented minorities, whose personal circumstances take them away from the industry for a time,” the regulator is creating the new Maintaining Qualifications Program (MQP). Eligible individuals will be able to complete annual CE through the MQP to maintain their qualification for any terminated registration categories. This program will go into effect March 15, 2022, with MQP content available by July 1, 2022. See Regulatory Notice 21-41 for details on eligibility and participation conditions.
Currently, registered persons must retake their qualification licensing exams after two years of losing their representative or principal registration. MQP participants will have a maximum of five years following the termination of a representative or principal registration category to reregister without having to retake their licensing exam or having to obtain an exam waiver.
Starting November 17, 2021, FINRA will begin notifying individuals who were registered as a representative or principal between March 15, 2020, and March 15, 2022, and those participating in the Financial Services Affiliate Waiver Program (FSAWP) prior to March 15, 2022, of their potential eligibility to participate in the MQP. These individuals can start notifying FINRA on January 31, 2022, that they intend to participate in the MQP. This is done through their FinPro accounts. Individuals will have until March 15, 2022, to notify FINRA of their intention. If an individual’s registration category has been terminated but the firm has not submitted a Form U5 to FINRA, the individual may let FINRA know about their intent to participate in the MQP by sending an email to firstname.lastname@example.org by March 15, 2022, at the latest.
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