Oct 14 (Reuters) - Broker-dealers should better manage conflicts of interest at their firms by more closely monitoring broker compensation and reviewing new financial products, among other practices, according to findings published late Monday by Wall Street's industry-funded watchdog.

The report on conflicts of interest in the broker-dealer industry, conducted by the Financial Industry Regulatory Authority, follows from a process that began last year when FINRA said it would begin requesting information from 14 firms.

The regulatory authority launched the review out of concern that certain financial incentives, including commission-based compensation to brokers, could lead to promotions of products that may not be the best choice for investors.

The regulator wanted to know, among other things, the types of procedures and controls in place at brokerages to prevent brokers from selling unsuitable products.

"If we find that firms have not made adequate progress, we will evaluate rulemaking to require reasonable policies to identify, manage and mitigate conflicts," FINRA said in a statement along with the report, noting that the report is intended to highlight effective practices for conflict management that go beyond regulatory requirements.

FINRA's effort is part of a recent examination strategy that aims to detect problems and effective compliance practices in place throughout the securities industry. The regulator uses its findings to provide guidance to the industry.

In the report, FINRA called for firms to disclose potential conflicts about new financial products "in plain English," noting that such conflicts may be particularly troublesome when complex financial products are sold to less knowledgeable investors, including retail investors.

FINRA also noted that firms could use "product agnostic" compensation grids to ensure brokers are not favoring products with higher commissions, as well as to cap the credit a broker can receive for a comparable product across providers.

The report follows recent efforts by FINRA to clamp down on another type of conflict: hefty bonuses brokers may receive when asking their clients to join them when switching from one firm to another. Switching firms could be costly to investors, who may have to sell certain securities, such as brokerage-branded mutual funds, that are not available through their broker's new firm, FINRA has said.

FINRA last month sent a proposal for review by the U.S. Securities and Exchange Commission for a rule that would require disclosures to certain clients about those compensation arrangements. The SEC must review and approve FINRA rule changes.