The Ontario Securities Commission is seeking comment on a slew of rule changes proposed by the Mutual Fund Dealers Association.

Among the proposals is an amendment to the rule that requires each MFDA firm to ensure suitability. The current rule does not address the obligations of firms where a client insists on proceeding with an order that is determined by the firm to be unsuitable based on the client’s investment objectives and risk factors.

The objective of the proposed amendment is to clarify the obligations of firms and reps if they receive an unsolicited order that they determine is unsuitable for the client.

The amendment notes that it is a registrant’s duty to give appropriate cautionary advice if a client places an order that appears unsuitable based on the client’s investment objectives and risk factors. But it states that is an internal policy decision of the dealer to accept or refuse such a trade

Another proposed amendment would expressly allow reps to continue to engage in securities related business as an employee of a bank as permitted by the Bank Act through the facilities of the bank, rather than the MFDA member.

As well, proposed amendments to client complaint handling policies will provide for more comprehensive reporting by reps to their dealers and by dealers to the MFDA. This will ensure that the MFDA and dealers receive critical information on a timely and consistent basis.

Another amendment is designed help to ensure that clients are not misled regarding the rate of return reported on their client communications for accounts that have been open for less 12 months..

Other amendments deal with account transfers, service arrangements, miscellaneous administrative amendments, mail insurance, termination notices, account statement delivery, powers of attorney, and business names.

The MFDA has withdrawn a proposed rule that would permit the delivery of consolidated account statements. The self-regulating organization says that, following discussions with the regulators, the MFDA Investor Protection Corporation, and after considering the comments received, the MFDA has reconsidered its original approach to the delivery of consolidated statements.

The MFDA is concerned that consolidated reporting may result in client confusion about the investor protection applicable to the financial products shown in a consolidated statement.