Customers who incurred excess fees on their 529 plans through Merrill Lynch, Pierce, Fenner & Smith, Raymond James & Associates, Inc., and Raymond James Financial Services, Inc. will receive approximately $12 million in restitution.

The move comes after the Financial Industry Regulatory Authority announced on November 6, 2019, that the firms Merrill Lynch and Raymond James failed to reasonably supervise 529 share-class recommendations.

529 plans are “tax-advantaged municipal securities that are designed to encourage saving for the future educational expenses of a designated beneficiary,” according to FINRA. 529 plans can be used to pay for K-12 tuition, up to $10,000 per year per beneficiary. The plans can also cover college expenses like tuition, fees, books, computers, and room and board.

529 plans are sponsored by state agencies and educational institutions like universities. They can be sold by states directly or through brokers and firms.

Merrill Lynch has agreed to pay restitution of at least $4 million to 529 customers. Raymond James and Associates, Inc. has agreed to pay more than $3.8 million while Raymond James Financial Services has agreed to pay $4.2 million in restitution.

FINRA says brokers at the firms failed to inform customers about specific fee structures that come with different 529 plans. Class A shares of 529 plans usually have a front-end sales charge and a lower annual fee than other classes. Class C shares usually have no front-end sales charge but have a higher annual fee than Class A shares. FINRA says the firms failed to establish written procedures on the fees. The agency also says the firms did not require representatives to evaluate beneficiary age and how many years had to pass before the first expected withdrawals of the 5229 plans.

“FINRA member firms must be cognizant of all costs to their customers when recommending a product,” Jessica Hopper, senior vice president and acting head of FINRA’s department of enforcement said in a release. “This is particularly important where an unsuitable recommendation may cause customers to incur higher fees year-after-year, especially in the case of young beneficiaries. Returning money to harmed investors as quickly and efficiently as possible remains a priority.”

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