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A report on the results of a regulatory sweep that examined dealers’ compliance with all aspects of the Client-Focused Reforms (CFRs) will be delivered in the first half of 2025, according to a new report from the Canadian Investment Regulatory Organization (CIRO).

On Friday, the self-regulatory organization issued its annual compliance report, which details some of its oversight work in the past year, and provides guidance to industry firms

In the report, CIRO noted that it conducted a joint sweep of firms’ compliance with all of the provisions of the CFRs — an earlier review focused on its provisions regarding conflicts of interest — along with the Canadian Securities Administrators (CSA).

The results of that review, which examined dealers’ adherence to know-your-client, know-your-product and suitability requirements in particular, will be released later this year, CIRO said.

“It is anticipated that a joint report with the CSA will be published in the first half of 2025, summarizing the findings from the sweep and offering additional guidance for registrants on fulfilling CFR obligations,” the SRO’s report noted.

For now, CIRO signalled that the sweep found weaknesses in dealers’ implementation of the principles-based CFR requirements.

It said the sweep “identified instances where dealers’ updates to their policies and procedures merely restated the principles-based rules without detailing how the dealer intends to comply,” adding that it expects more specificity, particularly where it comes to assessing clients’ risk tolerance, product due diligence, and firms’ processes for identifying and evaluating product alternatives as part of suitability assessments.

The report also highlighted the previously announced review of bank sales practices, which CIRO is undertaking along with the Ontario Securities Commission (OSC).

“The initial phase, focused on gathering information about sales culture and potential issues, will continue into 2025 to guide future actions,” it said.

Additionally, CIRO stressed the importance of dealers scrutinizing their use of technology in various areas, including social media, automated trading and cybersecurity controls, to ensure that they are meeting their regulatory responsibilities in these aspects of their operations.

“By alerting dealers to potential issues faced by their industry peers, CIRO advises all members about risks and emerging compliance matters, to strengthen investor protection while responding to changes in the industry,” said Andrew Kriegler, the SRO’s CEO, in a release.

“This report will help dealers with their own compliance policies and procedures so that collectively, as an industry, we can improve investor confidence and strengthen Canadian markets,” he added.