Customer complaints

Customers aren’t always happy with their account status or the service they receive. An upset customer might call to vent (and sometimes even yell), but securities regulators don’t treat that kind of feedback as a formal complaint.

FINRA Rule 4513 defines a complaint as:

“Any grievance by a customer or any person authorized to act on behalf of the customer involving the activities of the member or a person associated with the member in connection with the solicitation or execution of any transaction or the disposition of securities or funds of that customer”

FINRA only treats expressed customer dissatisfaction as a complaint if it’s in writing (including emails, text messages, and direct messages). Once a written complaint is received, member firms and their representatives must follow specific protocols (discussed below).

Because written complaints trigger formal requirements, many brokerage firms limit how representatives can communicate with customers. For example, if your firm doesn’t allow you to share your personal phone number or email address, this rule is often the reason.

When a representative receives a complaint, they must forward it to their assigned principal (supervisor). The principal then works with the registered representative to resolve the issue on the customer’s behalf.

Member firms must keep a separate file of all customer complaints for at least four years. The file must include any records related to resolving the complaint, including any action taken and any additional correspondence with the customer.

If this rule applied to verbal complaints, firms would have a hard time operating. Registered representatives would need to document any negative statement a customer made and submit it to a supervisor for review. In many service settings, customers complain frequently (whether warranted or not). When a customer puts dissatisfaction in writing, it’s more likely to signal a serious issue that needs formal attention.

The modern digital world adds another layer, especially with social media. If a customer complains in a tweet or posts a complaint on Instagram, does it count as a complaint? In general, FINRA applies its normal rules similarly with social media. A tweet may feel informal, but it’s still “in writing,” which means the firm must follow the same protocols.