Both the industry and customers liked FINRA arbitration because it was a relatively cost effective dispute resolution forum. With FINRA Notice to Members 13-21 and effectively doing away with having an industry person on the panel, FINRA has just made arbitration more expensive for everyone.
Without any industry presence on the panel, both customers and firms will have little choice but to present expert testimony to explain their respective positions regarding the investments at issue. In the past, that was not always necessary because you knew that one panel member would be able to explain the investments to the other panel members.
Left with little choice, firms should make sure that they have an adequate stable of potential independent experts. From my experience, the best choice will have had experience as a registered representative who had day-to-day contact with customers, as well as supervisory experience.
By having experts with this diverse background, you can effectively provide the perspective of direct customer relations to explain the investment recommendation process. At the same time, you can give the perspective of the firm and the adequacy of the supervision over the registered representative.
The absence of an industry person on your arbitration panel should not be the end of the world. It will, unfortunately, force you to expend funds on experts. Better to find your stable of experts sooner than later so that you can be prepared if the time should come.