Client Focused Reforms
Credit Hours: 1
Credit Type: Life – Technical
Credit #: AIC#60354; MB38767
The Client Focused Reforms that came into effect in 2021 have created a significant amount of dialogue, and more than a few questions. Stakeholders want to be prepared for the changes, to meet the expectations, and to incorporate practices which will result in the desired goals.
Several branches of the industry have come together in a committee to respond to the questions posed by stakeholders. The Canadian Securities Administrators (CSA) convened a Client Focused Reforms Committee which includes members of its own, as well as staff from the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada.
The committee has studied the questions raised and put together a document to provide guidance on operational issues and questions shared by industry stakeholders. In that document the Committee expresses its aim as follows:
Our responses are intended to add clarity on how certain requirements under the CFRs should be operationalized, while preserving flexibility to the extent possible for registrants to operationalize those requirements in the context of their particular business models.
We are not able to provide tailored responses to questions raised by individual registrants, or to provide detailed comments on policies, procedures, controls, sample documents, sample disclosure templates or sample checklists.
The responses to the questions below do not constitute legal advice. We will publish responses to additional questions submitted to the Committee during the phased transition period of the CFRs. We may also provide additional guidance in the future, after the CSA and SROs have had the opportunity to review how different registrants have implemented the CFRs and to assess best practices. We encourage registrants to plan now so that they will be in compliance with the new requirements once in force.
The responses set out below represent the views of staff in CSA jurisdictions and do not necessarily represent the views of the individual securities regulators.
The purpose of this course is to bring attention to the new Client Focused Reforms that came into effect in 2021. The questions posed demonstrate the depth of thought which members of the industry have given the new measures. Participants will be directed by questions raised by their peers, to review the full, original document NI 31-103 and its Companion Policy. That review, in itself, will be a worthwhile undertaking, but the main purpose of the course is to bring the combined thinking of industry leaders to you, participants as they consider and respond to the stakeholders’ questions.
Questions and Concerns expressed by Stakeholders
With respective Responses and Clarifications from the Committee around the following topics:
Training Modules (with regard to requirements)
Risk Profile and Sufficiency of KYC Information
Keeping KYC Information current (requirements)
Best Interest Standard (How registrants can ensure compliance with the standard)
Consent (with regard to material conflicts of interest)
Mutual Funds (with regard to Disclosure)
Product Assessment Requirements (regarding Proprietary and Non-Proprietary products)
Purchasing Assets from a client outside the course of business (amendment thereto)
Addressing conflicts of interest at the supervisory level (Branch Managers)
Proprietary Products as Material Conflicts of Interests
Conflicts of Interest Records (Requirements for Documentation)
Portfolio Managers (with regard to Dealing with Clients)
Contractual Arrangements (Fiduciary Duty)
Disclosure of conflicts of interest
Definition of Referral Fee
Referral Arrangements (with regard to Due Diligence)
Business Titles (Branch Managers/Permitted Clients)
Relationship Disclosure Information
Implementation Timeline (re: RDI requirements for new and existing clients)
Disclosure relating to conflicts of interest
General description of fees
Understanding Fees and Expenses
Pre-trade disclosure of charges – MERs
Hybrid Service (with regard to expectations around this aspect of client service)
Successful participants of this course will
- Have a heightened awareness of the complexity and the nuances surrounding the matters described in the Reforms to Enhance the Client-Registrant Relationship (Client Focused Reforms)
- Have an appreciation of the professionalism of their peers who put so much thought and effort into reading the amendments and reflecting on how they will influence operations and practices
- Be enlightened by the responses and clarifications which resulted in this document
provided by industry leaders
- Be more aware of the scope and intent of the regulation of client-focused relationship
- Be more knowledgeable with regard to the specific details of expectations around all the topics listed in the course content including:
Documentation and record keeping
Conflicts of interest,
Disclosure of information
- Be encouraged to take responsibility for implementing changes in their practice to meet the new standard
- Be inspired to provide leadership and initiate dialogue among peers with regard to the amendments
- Be prepared to provide informed support of changes in the operation of their firms towards a full achievement of the standards
The course content is the full response document of the Committee, to the stakeholders’ questions. Quiz questions provided will allow participants to gauge their grasp of the material.