Investment industry prepares for incoming client-focused reforms – The Globe and Mail

Lori Stein

Dec 18, 2019

A recent article in The Globe and Mail looks at the investor-protection rules that come into effect at the end of the year. According to author Brenda Bouw, the rules which were first introduced by the Canadian Securities Administrators in June 2018, and finalized in October 2019, put the “onus on investment firms and advisors to ensure clients’ interests come first when determining suitable investments for their portfolios.” According to the article, the rules also “introduce ‘new obligations on registrants’ and ‘codify best practices’, including increasing the amount of information compiled for the know-your-client (KYC) and know-your-product (KYP) documents.”

Although many advisors already have internal policies and procedures around client relationships, the new rules will ensure they meet industry standards and are well documented, says Lori Stein, a partner in Osler’s Investment Funds and Asset Management Group.

“For many advisors, the status quo is unlikely to be sufficient,” says Lori. “There are going to have to be enhancements. Even if, at the end of the day, the actual process doesn’t change that much, there has to be thought given to all of it ... especially on the conflict of interest side. If your practices don’t change at all, you’re going to have to explain and justify why that is.”

Lori also tells The Globe and Mail the amendments acknowledge that the level of detail that needs to be provided will depend on the firm’s business model, the type of clients it has, the services it offers and its relationship with clients.

“I would expect most advisors, unless they have an extremely simple business model, are going to have to look at each item ... and document why it is relevant to their ‘know your client’ and suitability analysis,” Lori says.

Read more of Lori’s insights in Brenda Bouw’s article “Investment industry prepares for incoming client-focused reforms” in The Globe and Mail.