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IIROC to continue Client-Focused Reforms review with focus on KYC and suitability

Investment Executive | Michelle Schriver |March 10, 2022

Regulations  - IIROC to continue Client-Focused Reforms review with focus on KYC and suitabilityDealers must prepare for ongoing CFR reviews and expiring pandemic exemptions, priorities report says

The Investment Industry Regulatory Organization of Canada (IIROC) is prioritizing reviews related to the client-focused reforms (CFR) and service at order-execution-only firms as it prepares for consolidation with the Mutual Fund Dealers Association of Canada.

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Regarding the CFRs and misleading communications and titles, client-facing registrants aren’t supposed to use corporate officer titles unless they legally hold such positions. When reviewing the use of a corporate title, IIROC said it will assess such things as a registrant’s functions and responsibilities to ensure they align with the title.  The report also notes that IIROC updated its exam processes to assess dealer compliance with collecting information from clients on trusted contact persons and placing temporary holds on client accounts in cases of mental incapacity or financial exploitation.

“As retail investors become increasingly reliant on automated online services, we are considering the extent to which failures in the provision of such services should be considered an investor protection issue,” the report says.

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In the coming year, IIROC will also focus on how OEO firms interact with social media platforms and use them for advertising. The concern is that online activity can include inaccurate information, possibly to manipulate markets.

“Dealers are reminded that existing IIROC rules and guidance pertaining to advertising and conflict of interest management continue to apply regardless of the communication technology that is being used,” the report says.

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