The Financial Industry Regulatory Authority's board of governors on Thursday approved two measures that could lead to big changes in its securities arbitration system, where investors and brokerages must resolve their disputes.

The Wall Street industry-funded watchdog approved a proposed rule banning settlements in customer disputes that require investors to not oppose erasing details about complaints from brokers' public records, the regulator said.

Finra also approved a measure that would make it more difficult for Wall Street veterans to act as arbitrators in many legal disputes between investors and their brokerages.

Both measures require approval from the U.S. Securities and Exchange Commission, which oversees Finra and changes to its rules.

The two issues have been the subject of longstanding controversies for Finra, which runs Wall Street's arbitration forum.

"Finra is taking the right step," said Barbara Roper, director of investor protection for the Consumer Federation of America, a Washington-based advocacy group. "They are demonstrating that they are sensitive to how these issues are perceived by the broader public," Roper said.

Settlement Deals

FIinra's efforts to ban settlement deals between brokerages and customers that require investors to not oppose erasing, or "expunging," details about complaints from brokers' public records stem from concerns by some lawyers and investor advocates that the practice could undermine the system investors and the industry use to check the backgrounds of their brokers.

"Finra feels strongly that expungement of customer dispute information shouldn't be 'bargained for,' Richard Ketchum, Finra's chairman and chief executive, said in a statement Thursday.

Ketchum made the plan public in January after two senators pressed for details about Finra's process for erasing, or "expunging," details about investors' complaints from brokers' public records.

Public Arbitrators

The board also approved a measure that would prevent people with any Wall Street experience whatsoever, such as former brokers or branch managers, from serving as so-called "public arbitrators," who are supposed to act as outside voices in the process.

Finra presently allows people who have been out of the industry for at least five years, but who may have worked in it as many as 20 years, to serve as public arbitrators. Investors' lawyers, however, have complained that the public arbitrators who once worked on Wall Street may have an industry bias.

Under the new plan, anyone with Wall Street experience must serve as a "non-public arbitrator." Non-public arbitrators are required to have industry expertise and typically hear disputes between industry entities.

The board also approved a measure that would let Finra seek input from the industry about a revised plan for brokerages to include a link on their websites to BrokerCheck, a free online service through which investors can check out the professional history of a broker or firm.

Finra scrapped a previous version of the plan last year after some brokerage industry groups complained that it would be difficult or impossible to fit the link on social media sites, such as Twitter. Under the new measure, firms would not have to display the link on social media or in emails, Finra said.