Securities regulators have imposed conditions on the registration of another scholarship plan dealer.
The Ontario Securities Commission (OSC) Friday issued a temporary order imposing conditions on Knowledge First Financial Inc. (KFFI), a distributor units of Registered Education Savings Plans (RESPs), in the wake of a compliance review it carried out between October 2011 and January 2012.
According to the order, OSC staff alleged a number of compliance deficiencies in a report on June 14. As a result, the OSC has imposed a number of conditions on the firm, including that it must hire an independent consultant to help it correct its compliance deficiencies, including: documenting and collecting clients’ know-your-client information, ensuring that all trades are suitable, training reps, and, overseeing its branch locations and performing branch audits.
While that process is underway, KFFI also has to retain an independent monitor to review new client applications, ensure adequate KYC information, and determine suitability. If the monitor isn’t satisfied with the KYC information it will contact the clients to ensure its accuracy, verify suitability, and ensure they understand the fee structure. The monitor is also to contact all new clients with an income of less than $50,000; 20% of those with an income between $50,000 and $70,000; and 10% with an income greater than $70,000. If the monitor uncovers unsuitable investments, they will be unwound at no cost to the client, according to the terms of the order. The monitor is also to report to the OSC on a bi-weekly basis.
Additionally, the firm is restricted from opening any new branch locations, and sponsoring new reps until the new compliance plan is implemented.
The conditions are similar to those imposed on scholarship plan dealer Global RESP Corp. by the OSC late last month. The order, which indicates that the firm has consented to the terms, expires in 15 days, and the case is slated to go back before the commission on August 21 for an update.