Putting Investors First: Client Focused Reforms and Conflicts of Interest

The Canadian Securities Administrators (CSA), which includes the British Columbia Securities Commission, developed a comprehensive set of rules, known as Client Focused Reforms, that will begin to come into effect across Canada today. This article discusses what you, as an investor, can expect to see in these new rules regarding conflicts of interest.

Client Focused Reforms Backgrounder

Both investors and the industry as a whole will benefit from Client Focused Reforms. These new rules are based on the fundamental concept that clients’ interests come first in their dealings with firms and individuals (we refer to them as investment advisors) that are registered to give investment advice and trade in securities. These changes mean better protection for retail investors, and create a uniform standard for firms and advisors across the country.


The CSA developed Client Focused Reforms through consultations with industry stakeholders, investor advocates, and others including the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA), two self-regulatory organizations that directly oversee registered individuals and dealer firms. The CSA is actively engaged in providing guidance through an implementation committee that is working with industry to implement these fundamental changes.


The first phase of the Client Focused Reforms implementation is the conflict of interest rules, which go into effect on June 30, 2021. The rest of the reforms, known as relationship disclosure, will come into effect on December 31, 2021, bringing the whole rules package into force across the country. We will discuss relationship disclosure in another blog post at a future date.

What You Can Expect Regarding Conflicts of Interest

Under the Client Focused Reforms, registered firms and investment advisors are required to put your interests first when recommending or choosing investments for you. This means that your advisor and firm must address material conflicts in your best interest, and put your interests first when recommending or choosing investments for you.

Resolving Conflicts of Interest

There are situations when an investment advisor may have a conflict of interest. For example, your advisor may get paid a higher commission for selling you a certain type of investment, creating a situation where your advisor could lean towards recommending this product even though it isn’t suitable to your situation or needs at the time.  

Under the new rules, your advisor must resolve this conflict in your best interest, taking into account different factors, including the suitability of a product for your situation.

If there is a similar product the firm can sell that is cheaper and more suitable for you, then your advisor must recommend this investment. However, other factors may come into play, such as a higher cost fund with better risk-adjusted returns, that could result in the advisor recommending a more expensive product.

The new rules require firms and advisors to inform you about conflicts of interest in a timely fashion. They must let you know, prominently and in understandable language, all material conflicts that you would want to know about, and how they are being addressed by the firm in your best interest.

They must also avoid material conflicts of interest if they are not being, or cannot be, addressed in your best interest.

How Investors Can Better Understand Conflicts of Interest

The best way to take action in any advisor-client relationship is through proactive communications. Take an active role in your relations with your registered advisor by following these steps:

  • Ask your advisor about conflicts: This should happen anytime you are meeting or talking with your advisor about investments.
  • Be sure that you understand what is said: Seeking clarity will benefit your long-term relationship with your advisor. If you don’t understand something, or you are uncertain of an explanation that is given to you, ask again.
  • Get the information in writing: Ask for information you are concerned about in writing. That could come in the form of an email, for example. Be sure to keep the information in your files. 
  • Bring up any perceived conflicts: If you feel there is a conflict of interest, be sure to bring it up with your advisor. If you aren’t satisfied with their answer, bring it up with their firm.

How to Deal with Questions or Concerns

Begin by discussing the conflict you are concerned about with the firm or advisor you are dealing with. If you are not satisfied with their answer, contact a securities regulator. Our File a Complaint section walks you through this process. If you need more help, feel free to call or email the BCSC directly at 1-800-373-6393 or [email protected].

InvestRight.org is the British Columbia Securities Commission’s investor education website. Subscribe to receive email updates from BCSC InvestRight.

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The CSA developed a comprehensive set of rules, known as Client Focused Reforms, that will begin to come into effect across Canada on June 30, 2021.

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The CSA developed a comprehensive set of rules, known as Client Focused Reforms, that will begin to come into effect across Canada on June 30, 2021.