Financial Advisor IQ (March 20, 2018) -- Finra has what it takes to address the hundreds of millions of dollars that go unpaid from its arbitration awards, and the time to act is now, InvestmentNews writes. 

The Public Investors Arbitration Bar Association estimates that from 2012 to 2016, around 27% of Finra arbitration awards were never paid, amounting to around $200 million, according to the publication. 

Finra itself recently unveiled a study showing that about 22% to 30% of awards went unpaid during that time period, ranging from $14 million in 2016 to $75 million in 2013, InvestmentNews writes.

Finra’s proposed solutions presented in the report include raising capital requirements on firms, requiring them to have unpaid-arbitration insurance, expanding the Securities Investor Protection Corp. coverage, creating an industry fund separate from the SIPC to cover the claims, and amending bankruptcy laws to prevent the dismissal of arbitration awards, according to the publication. 

But these solutions aren’t viable, InvestmentNews writes. They would either force Finra members who pay to foot the bill for those that fail to pay the awards, or involve other financial institutions, which could take years to implement.

A better alternative, according to the publication, is the bill introduced by Sen. Elizabeth Warren, D-Mass., earlier this month that would require Finra to use the money it collects from fines to build a pool available to cover unpaid arbitration awards. 

The regulator certainly has the money — it reaped $178.8 million in fines in 2016, the year $14 million in arbitration awards went unpaid, InvestmentNews writes. And if it doesn’t make enough money in fines, Finra should add a surcharge to every fine, according to the publication.