Regulators are taking a closer look at the various nuisance fees charged by brokerage firms.

A new working group that includes both state and federal regulators, along with brokerage firms, will look at unreasonable account transfer fees and other “service” charges broker-dealers levy on customers, with an initial goal of improving disclosures and making it easier for customers to comparison shop among firms.

But the actual amounts B-Ds charge for account transfers, stock certificates and other types of “service” fees—and whether the fees are excessive—is also under scrutiny.

The genesis of the new working group, which was announced by state regulators Thursday, was a state review of 34 broker-dealers begun in 2012. The review looked into various charges the firms levied and how the fees were disclosed to customers. An April 2014 report summarizing the results gave examples of excessive charges for account transfers and stock certificates.

“Following the report, some states emphasized [service] fees as part of their exam programs” said Andrea Seidt, Ohio securities commissioner and president of the North American Securities Administrators Association. She expects state regulators to continue tracking data on the fees and watching for excessive charges.

Service fees are “very much on the radar screen” of state regulators, added Brian Lantagne,  Director of the Massachusetts Securities Division, and co-chair of NASAA's Broker-Dealer Section, which is responsible for the working group.

The April report from NASAA specifically mentioned Automated Customer Account Transfer (ACAT) charges as one area of potential abuse. State regulators found that ACAT fees ranged from zero to $175. As part of the survey, the regulators checked with a large clearing firm used by nine of the surveyed broker-dealers and found that while the clearing firm charged the B-D’s only $25 to transfer an account, the broker-dealers charged customers between $50 and $100 for the transfer.

In another case, the survey found that a broker-dealer was charging $500 for physical securities certificates, more than eight times the $60 charged by the clearing firm.

The NASAA report noted that under state laws and Finra rules, fees charged to customers must be reasonably related to the services provided.

One recommendation the report made was for state regulators to look at “whether the markups to the internal costs [for account transfers] are reasonable.”

What’s an excessive markup?

“I don’t think we have a firm standard just yet,” Seidt said, noting that Finra would be involved in setting such a threshold.

She noted that past enforcement cases encountered markups in excess of 300 percent.

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