Risky reps, suitability issues and performance reporting irregularities are some of the top priorities for the Mutual Fund Dealers Association of Canada’s (MFDA) compliance department in the year ahead.
In a bulletin published Thursday, the MFDA detailed some of its top compliance concerns for 2020 — a list that included perennial issues such as suitability, as well as new priorities that are emerging as the MFDA ramps up its use of big data.
One of those new issues involves portfolio performance reporting that firms provide to clients. The MFDA is analyzing its client data for evidence of inaccurate reporting and is calling on firms to test their own performance reporting to ensure its accuracy.
Additionally, the MFDA said that it will be returning to issues uncovered in its previous review that focused on risky reps to assess whether firms have stepped up their own efforts at identifying these reps.
Conflicts of interest also remain “a top priority in our compliance program,” the MFDA bulletin noted.
In particular, the MFDA said that it will be looking at conflicts created by referral arrangements.
“We continue to be concerned with referral arrangements with portfolio managers where the referral fee amounts to a significant portion of the total management fee paid by the client,” the MFDA said, adding that firms must ensure that they are adequately dealing with any conflicts that may arise as a result of these kinds of arrangements.
Other issues highlighted in the bulletin include the forthcoming client-focused reforms and the MFDA’s ongoing work to introduce continuing education requirements for fund reps.