Merrill Lynch agreed to pay a $225,000 Financial Industry Regulatory Authority fine after a supervisory system missed more than 1,600 customer complaints in post-call surveys. The settlement, finalized on Wednesday, also includes a censure.
For customers who used the firm’s service lines, the gap meant complaints that should have been escalated instead stayed buried in survey comments. Merrill Lynch later suspended the written comment section of those surveys in January 2024 after identifying the issue.
2023 survey volume
More than 220,000 post-call survey responses came in during 2023, yet Merrill Lynch identified and reported around 2,400 complaints. Another 1,600 complaints were missed that year because the review process was not programmed correctly.
That scale matters because the missed complaints were not a one-off glitch. The reporting failure stretched from 2018 to 2023, and the regulator said the firm’s process was not reasonably designed to catch all reportable complaints from broker-dealer customers.
Lexicon built for banking
The problem traced to a lexicon of search terms and criteria that had been developed for consumer banking products. Used in the wrong setting, it did not reliably flag written customer complaints in the brokerage business, including routine service issues, access problems for funds, account information and documents, and technical problems with online systems and security incidents.
For a large retail-facing firm, that distinction is operational, not semantic: a screening tool built for one business line can miss reportable issues in another if the language customers use does not match the software’s assumptions.
FINRA credits self-reporting
FINRA credited Merrill Lynch for self-reporting the issue, reviewing 2023 survey responses, resolving the complaints identified in that review, and later reporting those complaints to the regulator. Merrill Lynch agreed to the settlement without admitting or denying the findings.
The unresolved piece is narrower but important: which specific written comments were missed by the supervisory system is not detailed in the record, leaving customers with the broad repair but not a line-by-line account of what fell through the cracks.
