From the Regulators

IIROC says its requirements to report fees and performance are generally consistent with the CSA’s CRM2 amendments

By James Langton |

Securities regulators have finalized the remaining set of reforms designed to improve transparency to retail clients, known as the Client Relationship Model (CRM2) reforms, although they have yet to decide on final implementation dates for these measures.

The Investment Industry Regulatory Organization of Canada (IIROC) said Monday that it has received approval from the Canadian Securities Administrators (CSA) for its remaining CRM2 amendments, which are slated to be implemented in stages on July 15, 2015 and July 15, 2016.

However, the regulators have yet to decide whether to grant a five and a half month extension that is being sought by the investment Industry Association of Canada (IIAC), which would allow dealers to adopt certain elements of these reforms at the end of 2015 and 2016, rather than in mid year.

IIAC steps up lobbying to delay CRM2

The IIAC has called on regulators to push back the deadline for the reforms to yearend on the basis that this makes a more logical implementation date for clients; and, among other things, that such a delay would help firms comply with the rules. Investor advocates have opposed the delay.

For now, IIROC says that it is considering the request, along with the CSA, and that it will issue a separate notice when a decision is made.

In the meantime, regulators have approved the final details of the rules that impose new requirements primarily designed to enhance disclosure of the costs of investing to clients, and improve reporting on account performance.

IIROC says that its version of the rules "are generally consistent" with the CSA's CRM2 amendments. No material changes were made to the version of the rules published last fall, largely at the behest of the CSA, which wanted to ensure that the requirements to report off-book positions proposed by IIROC are equivalent to the CSA's rules in this area.

"With enhanced disclosure there will be greater transparency of account information which should result in more meaningful conversations between advisors and their clients," said IIROC president and CEO, Andrew Kriegler. "Now that all elements of the Client Relationship Model reform initiative have been approved, we will continue to work with the industry and stakeholders to focus on effective implementation."

IIROC notes that it has also compiled and issued a list of FAQs to address common CRM2 implementation questions. It is also developing guidance to clarify elements of the initial CRM reforms, which deal with KYC and suitability obligations, and account relationship disclosure.