The investment industry is currently weathering an onslaught of new proposals to clarify the relationship between clients, advisors and dealers.

There are four schemes on the table at the moment, all from different organizations and all slightly different — but with virtually the same end goals.

“It is unusual to have so many different but related and overlapping proposals moving forward on similar — but not the same — timetables, by different regulatory bodies,” said John Adams, CEO of Primerica Financial Services Ltd., in Toronto this morning.

Adams, speaking at an information seminar hosted by the Investment Funds Institute of Canada (IFIC) today, chaired a discussion on one of the four proposed plans currently on the table.

First, the Canadian Securities Association plan, called the National Instrument 31-103, is out for comment until May 29. Second, the Joint Forum is now in the process of reviewing the comments it received on its proposal, the Point of Sale Disclosure 81-406. And finally, both the Investment Dealers‚ Association (IDA) and the Mutual Fund Dealers‚ Association (MFDA) are developing Client Relationship Models (CRM).

The IDA proposal was released in February and the comment period was later extended until May 30. Meanwhile, the MFDA’s proposed model is scheduled for publication and a subsequent comment period sometime this summer.

“There are significant implications for the IDA’s Client Relationship Model proposal, particularly in the area of performance reporting,” said Adams.

When it comes to performance reporting, there are three main areas that the IDA is looking to make changes to: customer account cost reports; cumulative account performance; and account percentage return information.

IFIC committees were set up to study the proposal and come up with a response. Adams said the recommendations are still a work-in-progress, as IFIC plans to publish its response at the end of May.

So far, IFIC says it would like to see a dialogue between industry and SROs to make sure the goals of the CRM are truly met by the proposed amendments. As well, it suggests a more in depth look at firms’ operations to make sure implementing the changes is reasonable without too drastic operational disruptions. In addition, IFIC would like to see flexibility in how firms can meet the requirements, specifically by allowing for different reporting options.

“The recommendations made by the IDA around performance reporting have probably been the most — not necessarily contentious — but the most interesting as far as feedback from members around the impact to their businesses,” said Richard Binnendyk, executive vice-president of client services at Univeris Corp. and a member of the IFIC sub-group studying the performance reporting portion of the IDA’s proposal.

When it comes to disclosures related to a relationship with a client, the proposal requires a dealer to provide all details, including fees and costs, and get formal acknowledgement of understanding from the client. These measures, under the proposed IDA plan, would be required for both new and existing clients. IFIC suggests that a lengthy implementation period and a “best effort” basis are essential for these requirements, as some clients are difficult to find and inform.

Another category that an IFIC committee is studying is suitability. Included in the IDA proposal is the requirement that a suitability review be undertaken whenever a new account is opened, received via transfer or there is a change in advisor or a material change in client information.

As the deadline for comments draws nearer, affected parties in the investment industry are encouraged to write letters and express their opinions on the Investment Dealers Association’s proposed Client Relationship Model (CRM).

According to Adams, IFIC’s submission will also comment on the desirability of harmonization of the overlapping proposals for the two CRM models.

“Generally IFIC agrees with the proposals, and many companies have in place the type of disclosure contemplated by the regulations,” said Adams. “IFIC is proposing enhancements that we believe will address some of the practical issues.”

IFIC’s prepared submission for the IDA will be available on May 22 and the comment period for the IDA proposal closes May 30.