IIAC voices its concerns at enforcement expansion plans
The investment industry’s national association has joined the criticism of IIROC’s proposals to expand its enforcement options.
As previously reported, FAIR Canada had taken aim at IIROC’s plans to introduce a Minor Contravention Program, for rule breaches that can’t be addressed via a Cautionary Letter but do not warrant formal disciplinary action, and Early Resolution Offers, which are designed to encourage firms to take remedial measures through voluntary acts of compensation. FAIR said that the proposals lacked detail and transparency.
Now the Investment Industry Association of Canada has had its say, in particular on the prospect of the MCP, which it said was not feasible because it does not believe IIROC Dealer Members or Approved Persons are likely to voluntarily accept they had broken the rules.
A statement read: “While IIROC has stated that the MCP admission would not constitute a formal disciplinary record and would therefore not be a part of the individual’s disciplinary record, it can still negatively impact the Approved Person professionally.
“There is uncertainty regarding how various other regulators, academics and professional associations would treat an admission under the MCP.”
The association said that more details are required about whether the admission would have to be disclosed within industry communications – like terminations or resignations - which could impact their future employment.
The IIAC also raised the concern that “very minor issues” usually dealt with effectively via internal discipline processes, would be unnecessarily and expensively elevated.
It said that in instances where contraventions led to little or no harm to clients, or was technical in nature, Dealer Member’s internal discipline processes, which are generally robust enough, are sufficient.
However, IIAC was more supportive of IIROC’s proposal to introduce EROs but said there needs to be more flexibility to ensure settlements can change as new information is forthcoming.