IIROC's work with Canadian Securities Administrators (CSA) results in proposed rule amendments to protect vulnerable investors

Measures would give investment firms/registrants tools to help protect clients  

TORONTO, March 5, 2020 /CNW/ - The Investment Industry Regulatory Organization of Canada (IIROC) applauds the work of the Canadian Securities Administrators (CSA) in formalizing protective measures to assist investment dealers/individuals when they reasonably believe a vulnerable client is being financially exploited or a client may have diminished mental capacity.

Proposed rules published today by the CSA are widely supported by investors, according to the results of a national survey released this past year, and IIROC-regulated investment dealers and individuals.

The CSA published proposed rule amendments for comment that would require registrants to take reasonable steps to obtain the name and contact information of a trusted contact person (TCP) from each client, as well as the client's written consent to contact the TCP in prescribed circumstances. 

The proposed amendments also clarify that if there is a reasonable belief that a vulnerable client is being financially exploited or that a client lacks mental capacity, a registered dealer/individual is not prevented from placing a temporary hold on the purchase or sale of a security or withdrawal or transfer of cash or securities from a client's account.

IIROC has been an active participant in the CSA Working Group that developed these proposed amendments in a way that strikes an appropriate balance between a client's autonomy/confidentiality and the need for investor protection measures.

"We worked closely with the CSA to develop a consistent and streamlined approach that will enable the investment industry to better protect their clients if they suspect vulnerability," says Irene Winel, IIROC's Senior Vice-President, Member Regulation. "We know from our members that these types of measures will help them better protect their clients."

IIROC consulted directly with Canadian investors to determine their awareness and support for having a trusted contact person. IIROC also asked investors to gauge whether they support giving investment dealers and individuals regulatory certainty around taking a temporary pause if they receive instructions that are out of character and not in the investor's best interest or raise suspicion of potential financial exploitation.

"Our national research showed resounding support from Canadian investors for measures to safeguard vulnerable investors, including some seniors," says Lucy Becker, IIROC's Vice-President, Public Affairs and Member Education Services. "The proposed tools would help to address some of the issues associated with Canada's aging population and vulnerable investors."

In June 2019, IIROC released the results of a national survey, which found 93 per cent of investors support a trusted contact person; 89 per cent support a temporary hold; and 92 per cent agree regulatory tools are necessary to allow advisors and firms to protect vulnerable or senior investors.

Today's Request for Comment marks an important next step in investor protection and IIROC encourages all stakeholders to participate in the comment period. To learn how to submit comments, which are due on or before June 3, 2020, please visit the CSA's Notice and Request for Comment.

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About IIROC:

IIROC is the pan-Canadian self-regulatory organization that oversees all investment dealers and their trading activity in Canada's debt and equity markets. IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while supporting healthy Canadian capital markets. IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of more than 170 Canadian investment dealer firms and their more than 29,000 registered employees, the majority of whom are commonly referred to as investment advisors. IIROC also sets and enforces market integrity rules regarding trading activity on Canadian debt and equity marketplaces.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - General News