Know Your Customer and suitability requirements are among the issues found during compliance review
Investment dealers and advisors must be aware of compliance issues in their marketing that may breach the rules according to a provincial regulator.
British Columbia Securities Commission (BCSC) has published the findings of its most recent Compliance Report Card which has focused on the content of materials used to attract and retain clients.
It found that some wealth professionals in the province were falling short of what is expected by posting information and marketing materials that are no longer current, making claims (including on social media) that are unsubstantiated or overly promotional, and are missing references and sources for third-party information used in marketing materials.
The focus on marketing materials was spearheaded by the Canadian Securities Administrators.
Among the issues discovered by the BCSC were some firms failing to meet their obligations to ensure investments are suitable for clients, and the Know Your Client (KYC) regulations.
Among these, were firms that had registered after the repeal of the Mortgage Investment Entity (MIE) registration exemption but did not collect KYC information from clients they had pre-registration.
Some of the compliance deficiencies led to terms and conditions being imposed on firms including requiring firms to appoint a compliance monitor or fix deficiencies before onboarding any new clients.
While BCSC’s review found 210 deficiencies among the 31 compliance reviews it undertook in 2021, the average of 6.8 per review is down from 8.1 in 2020 (although this was in part due to the narrower focus).
However, for some of the firms that were not in compliance, the BCSC made settlements or imposed sanctions on individuals for registration matters.
“We expect registered firms to ensure their marketing is done responsibly,” said Peter Brady, the BCSC’s Executive Director. “Our goal is to identify problems and make sure they get addressed before issues arise.”