Advisors have a one- month grace period to organize their practices around the rules governing the new National Do Not Call List, designed to help Canadians fend off unwelcome telephone sales.

Even if a consumer registers on Sept. 30, the first day the registry is operational, those who market by telephone — and who are required to keep track of who is on the DNCL — have a month to update their records before a three-year calling ban kicks in. (To avoid calls, consumers must re-register every three years with the Canadian Radio-television and Telecommunications Commission or when their telephone number changes.)

But there are still a number of issues advisors must be on top of if they don’t want to run afoul of the law, such as how the rules affect cold-calling, marketing affiliated products, client referrals and registering.

The DNCL is very straightforward, in that you cannot call anyone on the list. But if you have an existing business relationship with a client who is on the DNCL, you can continue to contact that client about his or her account because the Telecommunications Act provides an exemption for existing relationships.

This exemption does not apply, however, if you are licensed in more than one area and wish to pitch products offered by a different or affiliated company (known in the regulations as a “separate legal entity”) to existing clients.

“The existing business relationship does not extend to affiliate companies,” says Nancy Webster Cole, senior manager with the CRTC in Hull, Que., who is handling the registry.

So, if you have a client through your mutual fund dealership who is on the DNCL, you are not allowed to call to sell that client insurance through an independent MGA or even an affiliated MGA. Similarly, as a mutual fund-licensed advisor, you are not able to call and introduce that client to your company’s affiliated investment dealer. You can, however, send an e-mail.

CLARIFICATION NEEDED

But Advocis, the Financial Advisors Association of Canada, sees it differently. “Our interpretation is that, if you have an existing business relationship with that client, you can contact him or her to talk about financial advice [of any kind],” says Peter Tzanetakis, senior director of regulatory affairs with Advocis in Toronto. Advocis is awaiting clarification on the issue from the CRTC this month, but Webster Cole insists there is no way around the rule.

The DNCL also affects referrals, says Dan Richards, president of Strategic Imperatives Ltd. in Toronto. A referral through a third party does not imply the prospect has consented to receive your calls. So, you will have to relay a message to a prospect who is on the DNCL in some way other than by phone. You may ask the referring client to ask the prospect to contact you, or use mail or e-mail.

That will lead to a two-step prospecting strategy, says Richards. Stage 1 will focus on devising ways to get permission from clients to contact them — for example, by offering information of value, free of charge. Richards suggests you find a company willing to allow you to host a session with its employees. After the seminar, attendees can sign cards at each table, specifically allowing you to contact them.

For those advisors with two licences, to avoid confusion, it’s best to obtain specific consent to contact clients and prospects about other products and services. Webster Cole suggests you include a consent line in any written agreement between clients and yourself giving you permission to share their information with joint marketing partners or affiliated organizations. The consent should note that the contact is for the purpose of marketing products and services by affiliated companies.

“Once you have permission from the consumer, it overrides the DNCL,” says Webster Cole, “until they say: ‘Just don’t call me again’.”

If you haven’t already gotten such permission from existing clients, you should do so as soon as possible. However, calls to existing clients are not considered telemarketing when made within 18 months after a client has purchased a product and within six months of a prospect or lead giving you permission to contact him or her.

WHO REGISTERS?

When calling, you must identify yourself at the beginning of the call, which firm you work for and why you are calling. For example: “I’m Nancy, calling on behalf of ABC Company, and I’m calling because you inquired about our services (state when/where).”

@page_break@You don’t have to go through the identification process until you reach the specific individual you are calling.

Another priority is to determine who is responsible for registering and subscribing to the DNCL — you or your firm. Guidelines set by the Investment Industry Regulatory Organization of Canada determine who is the principal in the relationship with your client. If you are an employee or an agent doing business on behalf of a dealer, as defined by IIROC’s Rule 39, then the firm is responsible for registering for the list and paying to subscribe to the registry, says Webster Cole.

Similarly, members of the Mutual Fund Dealers Association of Canada are responsible for subscribing on behalf of their employees and agents, and ensuring that their reps, as defined by MFDA regulations, are following the rules.

Independent advisors are responsible for registering and subscribing themselves, Webster Cole says. Subscribers to the DNCL get only telephone numbers, not the date that consumers registered. So, companies must check their own records against the list regularly — at least once a month.

Tzanetakis notes that big firms can take advantage of the economies of scale when subscribing to the DNCL on behalf of hundreds, or even thousands, of advisors; meanwhile, shops with one or two advisors will bear a heavier cost burden relative to their size.

Subscription fees vary widely. The nationwide list costs $11,280 a year, with reduced rates for shorter durations. A list for one area code is $615; four area codes cost $2,460; individual numbers can be checked for 50¢ each.

Penalties can be as high as $15,000, but the CRTC will issue warnings, Webster Cole says. For information, see www.crtc.gc.ca, or call (877) 249-2782. IE