The transition period for several suitability rule changes for mutual fund dealers come to a close in a couple of days.
The Mutual Fund Dealers Association of Canada is reminding firms that, on December 3, several changes to know-your-client (KYC) and supervisory requirements take effect.
In particular, the KYC rule has been amended to require that the suitability of the investments held in each client’s account be assessed when certain triggering events occur, such as whenever: a client transfers assets into an account, or a firm or rep becomes aware of a material change to the client’s KYC information. Also, reps will be expected to review the suitability of investments in any account where the account has been re-assigned to them from another rep within the firm.
Additionally, the rule dealing with updating client information has been amended in order to provide greater detail on the client authorization, verification and approval requirements for changes to client information.
Amendments to minimum standards for account supervision also take effect: altering branch and head office trade review criteria/thresholds; changing the list of mandatory KYC information that must be collected on account opening; and, requiring that clients receive documents specifying their current risk tolerance, investment objectives, time horizon, income and net worth when any material changes have been made to the information contained in their KYC information, or the New Account Application Form.