The Mutual Fund Dealers Association of Canada has issued a notice to clarify the responsibilities of its members in servicing client accounts in the event of developments such as rep transfers, and dealer mergers.

The MFDA said its staff has become aware of a number of situations where client accounts have not been properly serviced as a result of rep transfers or other transitions taking place at firms. For example, clients are not provided with statements when their accounts are transferred; client accounts are left without a servicing representative after an rep transfers; or, client accounts are not properly serviced following a merger between firms.

The notice explains that when a client closes an account, either by cashing out or transferring to another dealer, the dealer must send an account statement for each such account either at the time of the transfer or at the end of the next statement period.

When a rep transfers from one dealer to another, their client accounts must be promptly transferred to the receiving dealer upon receipt of the client’s authorization for the transfer, it adds.

In the event that clients do not provide their authorization prior to the transfer, the accounts must be re-assigned to another rep and clients must be promptly notified of the change. Re-assignment to a particular rep is not required in situations where the dealer does not to assign particular individual reps to service client accounts. However, the firm must still have policies and procedures to ensure that every account is properly serviced on a continuous basis.

It also notes that dealers remain responsible for all accounts in the event of a merger, and must ensure that a valid rep and dealer code is assigned to each account throughout the reorganization process.