The Mutual Fund Dealers Association of Canada (MFDA) is planning changes to its compliance examination process to make it more risk-based.
In a compliance bulletin issued today the MFDA says that, starting in January 2014, it will perform routine financial compliance examinations of its Level 4 members on either a one or two-year cycle, and on its Level 2&3 members on either a two or four-year cycle. The frequency of these exams will be “based on an assessment of risk factors specifically relating to financial matters of the firm”.
The regulator notes that the changes to its financial compliance exam process are designed to “further integrate a risk-based methodology”. It also says that the factors used to assess a firm’s riskiness will be reviewed on an ongoing basis, and that it is possible for a firm’s examination cycle to change as a result.
Additionally, the MFDA says that for Level 2/3 members whose financial compliance examination cycle is consistent with its sales compliance examination cycle, an integrated review will be performed. Where those cycles differ, separate examinations will be conducted, it notes.
The regulator will also continue to perform targeted examinations that focus on specific issues, and will be reviewing monthly and annual financial filings routinely, it adds.