The Mutual Fund Dealers Association of Canada (MFDA) has issued a notice that aims to provide guidance to its members on meeting their suitability obligations, and it promises to beef up its rules in this area in the future.

The MFDA says that the guidelines, “are intended to assist in the establishment of consistent and objective industry standards for assessing investment suitability for the benefit of members and investors.” It notes that its staff receives numerous requests for guidance in this area. Also, the complaints it receives, and the issues revealed in compliance examinations have made it clear that clarifying suitability obligations should be a priority for the MFDA.

The regulator indicates that certain aspects of the notice will be the subject of future rule and policy proposals. In the meantime, the notice is intended to address some of these issues.

The areas that are subject to new guidelines, and may result in future rule changes, include issues such as material changes to know-your-client information, suitability triggers and criteria for account and trade supervision, it explains.

Any rule or policy amendments will be subject to the normal review and approval process, and be subject to a public comment period.

The notice also offers guidance on assessing suitability where borrowed funds have been used to invest, and it explains MFDA staff’s view when assessing suitability as part of a compliance examination or enforcement case.