FINRA Notice 26-03: Streamlining the Use of Negative Consent for Bulk Account Transfers—What Advisors and Firms Need to Know

On February 6, 2026, FINRA issued Regulatory Notice 26-03, “Reducing Burdens and Providing Guidance on the Use of Negative Consent for the Bulk Transfer or Assignment of Customers’ Accounts”. FINRA’s new guidance simplifies and sharpens the rules of the road: effective April 1, 2026, firms are no longer required to submit draft letters for FINRA review and approval before submitting negative consent letters to clients.

FINRA Notice 26-03 streamlines the use of negative consent letters to customers, particularly for introducing brokers and clearing brokers, but it also shifts a significant burden to member firms to determine when the use of negative consent is appropriate and makes firms singularly responsible for the content and delivery of those messages. Just as important as what Notice 26-03 changes, is what it does not change: advisors cannot use negative consent to move their personal books when switching firms.

Regulatory Notice 26-03 – Key Changes

Regulatory Notice 26-03 is a limited, firm-level, tool aimed at reducing the burdens historically associated with the use of negative consent when firms sought to bulk transfer client accounts in specific situations. After FINRA’s 2002 guidance, member firms seeking to send negative consent letters to clients were required to submit draft negative consent letters to FINRA staff for review and had to wait to receive a “no objection” before sending the letters to customers. That preclearance step often sat on the critical path for time-sensitive business events, including wind-downs, divestitures, and post-termination assignments of orphaned accounts, and it introduced delay, iterative redlining, and uneven expectations across firms. The delay could prolong service disruptions, increase operational risk, confuse customers, and complicate sequencing with other required filings, including Continuing Membership Applications where Rule 1017 applied.

FINRA Notice 26-03 eliminates the preclearance practice and replaces it with a single, comprehensive set of effective practices and minimum disclosures member firms can rely on without seeking a “no objection” response from FINRA. But with greater efficiency comes greater responsibility and member firms are now responsible for determining whether the use of negative consent is appropriate in a given situation and the content and timing of such notice to customers.

Starting April 1, 2026, a member firm may proceed with negative consent in appropriate scenarios without FINRA preclearance when affirmative consent is impracticable and speed preserves customer access with minimal disruptions. These appropriate scenarios have historically included:

• significant changes in a firm’s clearing arrangements;
• wind-down of an introducing or clearing firm;
• divestitures of a defined business line;
• post-termination assignment of orphaned accounts by a clearing firm to other introducing firms on its platform;
• member mergers or acquisitions leading to a wholesale reassignment;
• conclusion or termination of a networking arrangement governed by Rule 3160, as directed by the financial institution;
• transition of accounts tied to employee equity compensation or employer-sponsored retirement plan arrangements as directed by the employer; and
• specified, legacy-recognized situations where a firm changes the broker-dealer of record on directly held mutual fund or variable insurance accounts.

Although FINRA Notice 26-03 does not change when negative consent for bulk transfers is appropriate, it does shift the burden to member firms to determine both when it is appropriate and how to communicate the negative consent effectively to customers. Negative consent letters must: 

• Provide customers with clear, plain-English explanations of the reason for the transfer or assignment, how the event affects the account, and any temporary service implications;
• Provide at least thirty days’ notice (absent a true exigency);
• Include clear, conspicuous, and simple opt-out instructions and deadlines for doing so; and
• Disclose any costs and notification that the firm will waive ACATS fees for customers who choose to have their accounts moved because of a firm-initiated change.

When Negative Consent Is Not An Option

The notice reaffirms several bright lines. Registered persons may not use negative consent to transfer or assign customer accounts when changing firms, and advisors cannot rely on this framework to move their personal books. Individual customer account transfers remain governed by Rule 11870 and the ACATS process, which requires a customer’s affirmative instruction to the receiving firm. 

Members also cannot use negative consent where doing so would effectively exercise discretion without prior written customer authorization or where the event falls outside the limited, bulk operational changes the notice describes. If required approvals under Rule 1017 are outstanding, or if other legal regimes apply—such as investment advisory or retirement account rules that demand different consents—negative consent is not a substitute. Where customers have not provided the prior written affirmative consents required by Exchange Act Rule 15c3-3 for sweep program participation and product changes, firms cannot rely on negative consent letters to change sweep investments or to reinvest free credit balances inconsistently with those requirements.

Potential Pitfalls and Risks

Firms using negative consent face material risk if their letters omit core disclosures or provide inadequate time and means for customers to object. Absent a genuine exigency, compressing the notice period below thirty days may be second-guessed in exams, and vague descriptions of the business rationale or the impacts on service can be viewed as impairing informed customer choice. Trading or servicing restrictions imposed during the transition must be authorized and disclosed; unannounced limitations can cause customer harm and trigger supervisory findings. Failure to waive ACATS fees for customers who opt out, or to disclose other material costs, can lead to allegations of unfair practices and customer remediation. Missteps around free credit balances and sweep programs—especially where member firms lack the required prior written affirmative consents—raise financial responsibility issues. Overlooking retail communication standards under Rule 2210, or failing to file a required Continuing Membership Application under Rule 1017 for a merger, acquisition, or material operational change tied to the transfer, are additional pitfalls. Recordkeeping gaps, including proof of delivery and opt-out processing, can compound exposure during examinations.

The notice calls out Regulation S-P as a core constraint and expects firms to acknowledge compliance with the privacy and safeguarding rules in their letters. In practice, that means any transfer or assignment must be consistent with the firm’s privacy notices, any applicable consumer opt-out rights, and the safeguarding of nonpublic personal information during the transition. Firms should ensure that sharing customer data with a receiving firm fits within stated privacy policies or permitted exceptions and that service providers engaged in the transfer maintain appropriate security controls. When a brokerage relationship changes, the receiving firm may still need to obtain additional authorizations, agreements, or documentation before effecting transactions, even if the relationship-level assignment was completed by negative consent. Clear articulation of these privacy and operational boundaries in customer communications can reduce confusion and regulatory risk while reinforcing the firm’s commitment to data protection.

Conclusion

Regulatory Notice 26-03 delivers long-awaited efficiency by removing the preclearance bottleneck but with this speed comes a tradeoff.  Member firms now own the entire negative-consent process, from determining when it is appropriate to ensuring that messaging, disclosures, timing, and recordkeeping meet all applicable requirements.  And with FINRA stepping away from the initial preclearance process, firms should expect heightened scrutiny during exams. Any missteps will surface only after customers may have been affected.  The takeaway is clear: greater efficiency requires greater vigilance, and firms must ensure their use of negative consent remains firmly within FINRA’s bright-line rules. 

 

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