Key Takeaways
- Customer complaints must be documented and investigated.
- Written complaints require specific handling procedures.
- Supervisors must respond to complaints promptly.
- Some complaints require regulatory reporting.
- Complaint patterns may indicate systemic issues.
Last updated: January 2026
Customer Complaint Handling
Customer complaints provide important feedback and may indicate compliance problems. Proper handling protects customers and the firm.
What Constitutes a Complaint
FINRA Definition
A complaint is any written statement of a customer (or person acting on behalf of a customer) alleging a grievance involving the activities of the firm or its associated persons.
Types of Complaints
| Type | Examples |
|---|---|
| Sales practice | Unsuitable recommendations, misrepresentation |
| Unauthorized trading | Trades without customer consent |
| Execution | Poor execution, delays |
| Account handling | Errors, unauthorized changes |
| Fee disputes | Commission disagreements |
Complaint Processing
Initial Receipt
| Step | Action |
|---|---|
| Log immediately | Enter in complaint log |
| Acknowledge | Send acknowledgment to customer |
| Assign | Designate investigator |
| Preserve | Secure relevant records |
Investigation
| Step | Action |
|---|---|
| Review records | Account documents, trade history |
| Interview parties | Customer, representative, others |
| Analyze | Determine what happened |
| Conclude | Make determination on validity |
Resolution
| Outcome | Action |
|---|---|
| Valid complaint | Offer appropriate remedy |
| Invalid complaint | Explain findings to customer |
| Partial validity | Address valid portions |
| Unresolved | May proceed to arbitration |
Recordkeeping Requirements
Complaint Log Requirements
| Element | Details |
|---|---|
| Complainant | Customer name and account |
| Date received | When complaint was received |
| Nature | Description of the complaint |
| Associated person | Representative involved |
| Resolution | How it was resolved |
| Disposition date | When resolution reached |
Retention Requirements
| Record | Retention Period |
|---|---|
| Complaint log | 4 years (minimum) |
| Complaint files | 4 years |
| Related correspondence | 4 years |
Regulatory Reporting
When Reporting is Required
| Situation | Reporting Requirement |
|---|---|
| Written complaint | May require U4/U5 disclosure |
| Arbitration filed | Must be disclosed |
| Settlement over threshold | U4 amendment required |
| Judgment/award | U4 amendment required |
Disclosure Thresholds
| Event | Threshold |
|---|---|
| Customer arbitration/civil litigation | Any settled or decided claim |
| Settlement | $15,000 or more (individual) |
| Pending complaints | Must be disclosed when pending |
Identifying Patterns
Pattern Analysis
| Pattern | Concern |
|---|---|
| Multiple complaints, same rep | Individual performance issue |
| Multiple complaints, same product | Product or training issue |
| Multiple complaints, same branch | Supervision issue |
| Cluster in time period | Market event or policy change |
Corrective Actions
| Issue Identified | Possible Action |
|---|---|
| Individual rep | Training, supervision, discipline |
| Product issue | Revise disclosures, limit sales |
| Branch issue | Review supervision, enhance controls |
| Firm-wide | Policy changes, broad training |
Test Your Knowledge
Under FINRA rules, a customer complaint is defined as:
A
B
C
D
Test Your Knowledge
The complaint log must be retained for a minimum of:
A
B
C
D
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