The Securities Industry and Financial Markets Association and other lobby groups are urging against the Financial Industry Regulatory Authority returning to on-site inspections, suspended in light of Covid-19 — and the regulator appears to be open to the idea to some extent, according to news reports.

In November, Finra passed temporary regulatory relief permitting remote inspection of broker-dealers’ offices, FA-IQ sister publication Ignites writes. Prior to that, Finra required broker-dealers to inspect branches that don’t supervise other locations at least once every three years, while offices of supervisory jurisdiction and branches that supervise other locations were required to be examined annually, as reported.

Finra granted the relief to make the rule work “in a non-contact environment,” Larry Stadulis, partner at law firm Stradley Ronon, tells Ignites.

That relief, however, officially ends on December 31 this year — something broker-dealers are “acutely aware” of, according to Amy Natterson Kroll, partner at law firm Morgan Lewis, the publication writes.

In response to Finra’s request in December for public comment on remote inspections, Sifma and the Financial Services Institute are urging the industry’s self-regulator to make the option of remote inspections permanent, according to Ignites.

Sifma says that having compliance personnel at the physical office space is “a relic of a bygone era,” according to the publication. Compliance experts agree.

“In our world, where basically our office is wherever our laptop is, the schemata for in-person inspection seems antiquated,” Morgan Lewis’ Kroll said, according to Ignites.

Finra, meanwhile, may very well deliver what the industry wants, at least temporarily: Finra chief executive officer Robert Cook announced last month at a Sifma conference that Finra and the Securities and Exchange Commission were discussing extending the option of remote inspections into 2022, according to the publication.

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