The Canadian Securities Administrators (CSA) published final amendments on July 15, 2021 that will improve protection of older and vulnerable clients across Canada, by providing registrants with tools and guidance to address situations involving diminished mental capacity or financial exploitation of their clients.
The amendments strengthen protection of older and vulnerable clients through two main components:
- Trusted Contact Person (TCP) – registrants will be required to take reasonable steps to obtain the name and contact information of a TCP from individual clients, and written consent for the TCP to be contacted in specified circumstances (e.g., if the registrant has concerns about possible financial exploitation of a client who is vulnerable or about the client’s mental capacity to make decisions involving financial matters.) A TCP does not have authority to make transactions on the account, but is intended to be a resource to assist registrants in protecting a client’s financial interests or assets in these circumstances. While clients are not required to identify a TCP in order to open an account, registrants will be required to take reasonable steps to obtain and update TCP information as part of the Know Your Client (KYC) process.
- Temporary Holds – the amendments create a regulatory framework for registrants who place a temporary hold on transactions, withdrawals or transfers in circumstances where the registrant has a reasonable belief that there is financial exploitation of a vulnerable client or where there are concerns about a client’s mental capacity to make decisions involving financial matters.
According to the CSA, the amendments are expected to provide more robust investor protection, while also respecting client autonomy and responding to the needs and priorities of older and vulnerable investors.
The CSA worked with the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) to develop the amendments. The amendments will apply to all registered firms, including members of IIROC and the MFDA. IIROC and the MFDA plan to implement corresponding amendments to the IIROC Rules and MFDA Rules, respectively. All of the amendments come into effect on December 31, 2021, subject to necessary approvals.
The amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and related changes to its companion policy can be found on CSA members’ websites.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
Report a Concern
If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.