The Mutual Fund Dealers Association of Canada (MFDA) has issued a revised notice spelling out the role of compliance and supervision functions at fund dealer firms.
The notice was first published back in 2006 along with several other self-regulatory organizations (SROs), including the Montreal Exchange, Market Regulation Services Inc. (RS) and the Investment Dealers Association of Canada (IDA). RS and the IDA have since combined into the Investment Industry Regulatory Organization of Canada (IIROC).
The original notice sets out the expectations of the SROs regarding the compliance function at firms, and the roles and responsibilities of firms, their boards, management, and compliance personnel.
The MFDA released an updated edition of the notice Thursday, which it says is being issued in response to changes to registration rules that have taken place since then, including: the creation of new registration categories, changes to the scope of registerable activities, and updates to compliance-related functions and supervisors’ roles and responsibilities.
Revised notices are being issued by both the MFDA and IIROC, it notes, but they are being issued separately by each SRO. “However, MFDA staff has worked with IIROC staff during the course of revisions to this notice to ensure that concepts and principles remain harmonized,” it says.
The notice goes on to spell out the MFDA’s expectations of the compliance function; to clarify the distinction between supervisory and compliance roles; and, it provides guidance on creating an effective compliance program, and tips for compliance officers. It also explains when individuals may face enforcement action by the MFDA.
The notice stresses the need for strong cultures of compliance, and says that such cultures “[focus] not only on compliance with all applicable rules and regulations, but also emphasizes the importance of personal integrity and the need to deal with clients fairly, honestly, and in good faith at all times is the responsibility of each individual acting on behalf of a firm.”
It stresses that the existence of compliance personnel, and those with “ultimate responsibility”, does not “relieve anyone else of the obligation to act on or escalate compliance issues.” It also says that everyone at a dealer “should understand the standards of conduct of their role”, and that “compliance should not be viewed as an isolated activity”.