Broker-dealers probably won’t be able to kill Finra’s controversial CARDs proposal, so they should work to mold it to their liking, according to an industry compliance executive.

The Comprehensive Automated Risk Data System “is one of the top priorities” Finra has, said Kathy VanNoy-Pineda, executive vice president at LPL Financial.

“There’s no possibility that it’s going to be derailed,” VanNoy-Pineda said Wednesday during a regulatory compliance webinar hosted by Morningstar’s ByAllAccounts unit.

CARDs would collect massive amounts of customer account information and create a database that Finra would use for automated oversight purposes.

Finra floated a proposed rule in September. Comments are due December 1.  Finra can still amend the proposal, and would then have to seek SEC approval.

The proposal has a “huge amount of detail [and] lists everything that needs to be provided” to Finra by broker-dealers and clearing firms under the plan, VanNoy-Pineda said. “It’s really key for every firm to familiarize themselves with details [of the proposal] and give their opinion and feedback.”

A separate issue, and one of more immediate concern, are the enhanced suitability rules that went into effect in 2012. Finra’s suitability rules were expanded to cover investment strategies and explicit recommendations to hold securities.

“The question becomes, what is a hold recommendation?” said Todd Cipperman of Cipperman Compliance Services during the webinar. “Do brokers have to keep a record of when they don’t make a [buy or sell] recommendation?”

A Finra regulatory notice last September raised an “interesting idea that firms [might want to] keep a trade blotter when they made hold recommendations,” Cipperman said.

The fiduciary issue is also something brokerage firms need to watch. Despite the inability of the SEC to create one fiduciary standard for all types of advice-giving firms, Finra is moving in that direction for broker-dealers, Cipperman said.

Finra’s expanded suitability rules, which require firms to look more broadly at client needs, “look more like financial planning, investment advisory and fiduciary duty” than a traditional suitability analysis, he said.

Firms will also have to take care in structuring branch-office supervision under new Finra rules set to go into effect December 1, VanNoy-Pineda said.

“A key concept [with the new rule] is a bit new,” she said. “It’s the identification and mitigation of conflicts of interest, [so] make sure your exams are not being done by someone with a conflict, [like] branch managers who hire [people to] supervise them.”

Broker-dealers need to “map out a supervisory tree, then document it,” VanNoy-Pineda said.

Finally, regulators are still concerned with inactive brokerage clients being moved into fee-based accounts in order to generate more revenue, Cipperman added.

“At the corporate level, someone should be watching where that client would best be served,” he said.