Merrill Lynch has agreed to pay a $225,000 fine and accept a censure over allegations it failed to report more than 1,600 customer complaints submitted through post-call surveys, according to a Financial Industry Regulatory Authority settlement finalized on Wednesday.
From 2018 to 2023, Merrill failed to reasonably review written comments that customers submitted after calling its service centers, according to the settlement.
Merrill had invited callers to fill out a survey that included a free-form comment section and in 2023, for example, it received more than 220,000 responses, Finra said. The firm identified and reported around 2,400 complaints during that year but missed the 1,600 others as a result of an improperly programmed supervisory system, according to the settlement.
Merrill’s review process relied on a lexicon of search terms and criteria, but it had been developed for consumer banking products and was not reasonably designed to identify all reportable complaints for broker-dealer customers, according to the settlement.
Most complaints involved routine service issues but others related to customers’ inability to access funds or obtain account information and documents as well as technical problems with Merrill’s online systems and security incidents, Finra said.
The regulator concluded that Merrill failed to establish a reasonable supervisory system to comply with its customer complaint reporting obligations.
Merrill agreed to the settlement without admitting or denying the findings.
A Merrill spokesperson declined to comment. The firm’s brokerage unit includes its Merrill Lynch Wealth Management franchise as well as Bank of America Private Bank, and its Merrill Edge self-directed unit is housed under the company’s consumer banking division.
In determining the sanctions, Finra credited Merrill for self-reporting the issue, conducting a review of survey responses from 2023, resolving complaints identified during that review and subsequently reporting those complaints to the regulator. Merrill suspended the written comment section of its post-call surveys in January 2024 after identifying the issue.
