Firms regularly send statements, confirmations, and other correspondence to customers. But what happens when a customer asks the firm to hold their mail? FINRA sets strict limits on when and how firms can hold mail, and what safeguards must be in place.
Mail Holding Requirements
A firm may hold a customer's mail only if all of the following conditions are met:
- The customer provides written instructions requesting the hold (verbal requests are not sufficient)
- The instructions specify the time period for the hold
- The hold period does not exceed 3 months (unless an acceptable reason exists for a longer hold)
- The firm can communicate with the customer through alternative means during the hold (such as email or the firm's website)
Exam Tip: Gotchas
- Written instructions are required. A phone call or verbal request from the customer is not enough to start a mail hold.
- 3 months is the default maximum, not 6 months, not 1 year. If a question gives a time period longer than 3 months with no special reason, the hold is not permitted.
Extended Holds Beyond 3 Months
A hold longer than 3 months is only permitted if the customer provides an acceptable reason, such as:
- Extended travel abroad
- Safety or security concerns
Convenience is NOT an acceptable reason for extending a mail hold beyond 3 months.
Think of it this way: If a customer simply says "I don't feel like checking my mail," that is convenience, and the firm cannot extend the hold past 3 months. But if the customer is traveling overseas for 6 months, that qualifies as a legitimate reason.
Exam Tip: Gotchas
- "For convenience" = automatic 3-month cap. If a question says a customer wants mail held "for convenience," the answer is that the hold cannot exceed 3 months regardless of how long the customer requests.
Firm Obligations During the Hold
Even while holding mail, the firm must:
- Inform the customer in writing of alternate methods to monitor account activity (email, online access) and provide important disclosures (such as SIPC information FINRA requires firms to provide)
- Obtain confirmation that the customer received this information
- Verify at reasonable intervals that the customer's hold instructions still apply
- Prevent tampering: ensure mail is not tampered with, held without consent, or misused by an associated person
Exam Tip: Gotchas
- The firm's obligations do not pause during a mail hold. The firm must still deliver important disclosures and be able to reach the customer through alternative channels.
- Associated persons cannot use mail holds to hide activity. The rule specifically requires firms to prevent misuse by their own representatives.