FINRA Aims to Reduce Burdens Associated With Use of Negative Consent for Bulk Account Transfers or Assignments

On February 6, 2026, the Financial Industry Regulatory Authority, Inc. (FINRA) issued Regulatory Notice 26-03 (the Notice), addressing the use of negative consent for the bulk transfer or assignment of customer accounts. Negative consent refers to a process through which firms notify customers that their accounts will be transferred unless a customer affirmatively objects to the transfer. The Notice reduces burdens associated with the use of negative consent for bulk transfers or assignments by eliminating FINRA’s prior review process for draft negative consent letters. The Notice also consolidates prior guidance on the use of negative consent letters to outline effective practices for using negative consent in bulk transfers or assignments.¹

Key Takeaways

While firms are generally required to obtain a customer’s affirmative consent to transfer or assign an individual customer’s account via FINRA Rule 11870, the Notice affirms that the use of negative consent may be appropriate in limited situations involving bulk transfers or assignments of multiple customers’ accounts. These circumstances typically arise from changes in a firm’s operations or business model — for example, a firm’s exit of a particular line of business, a change in clearing firm, or the merger of a member with one or more other members. In such instances, the use of negative consent can enhance efficiency and minimize disruptions to customer account access, particularly in situations where obtaining affirmative customer consent is impracticable for reasons beyond the member firm’s control.

Based on historical guidance issued by the National Association of Securities Dealers, Inc., members developed the practice of submitting draft negative consent letters — prior to use — for review by FINRA staff. In response to industry feedback, and in an effort to reduce potential burdens on firms using negative consent for bulk transfers or assignments — particularly in time-sensitive situations — FINRA intends to discontinue such review process effective April 1, 2026. Thereafter, firms may use such negative consent letters without submitting a draft to FINRA or obtaining the FINRA staff’s confirmation that it has “no objection” to the letters.

The Notice also sets forth effective practices for the use of negative consent in connection with bulk transfers or assignments of accounts, including the following.

• Customer Authorization: FINRA reminds members of the importance of obtaining customers’ prior written consent to make changes to their accounts by negative consent as may be required (e.g., under SEC Rule 15c3-3(j)(2)(ii) relating to future changes to a member’s sweep program for free credit balances). Members should consider obtaining such authorization during the client onboarding process.
• Compliance With Existing Legal and Regulatory Requirements: Firms must confirm that the transfer or assignment is consistent with all applicable laws, rules, and regulations, including, for example, FINRA Rules 1017 (if the transfer or assignment relates to a change in ownership or control of the transferring member) and 2210 and Regulation S-P. Other laws, rules, and regulations may apply, such as with respect to investment advisory accounts and retirement accounts, which, for example, are often held concurrently with brokerage accounts by the same private wealth customer.
• Timing: Absent exigent circumstances, firms should provide customers with at least 30 calendar days’ notice before transferring or assigning their accounts via negative consent to another member. Exigent circumstances are rare but may include situations such as a firm’s going out of business on short notice for unforeseen reasons.
• Description: Firms should provide customers with a clear and concise description of the circumstances necessitating the transfer or assignment and other relevant information that would assist the customer’s decision about the change in their account.
• Opt-Out Provisions: Negative consent letters should inform customers of their right to object to the proposed transfer or assignment, the deadline for opting out, the method for doing so, and available alternatives if the customer opts out.
• Fee Waivers: Customers who do not opt out should not be charged for any transfer or assignment based on negative consent. For customers who opt out and affirmatively transfer their account to another member, firms should waive any Automated Customer Account Transfer Service fees related to such transfers, whether the transfer occurs before or after the opt-out deadline.
• Delivery: Firms may choose among various delivery methods for sending letters, including regular mail or electronic delivery.
  
  

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¹ See Notice to Members 02-57 of the former National Association of Securities Dealers, Inc. and FINRA Regulatory Notice 15-22 (pursuant to which FINRA had proposed to adopt FINRA Rule 3260 to memorialize guidance on negative consents but which rule proposal was never adopted).