CIRO seeks to tackle persistent policy challenges

Long-standing industry issues — including advisor incorporation, the pace of account transfers and investor complaint-handling — are all on the agenda for the Canadian Investment Regulatory Organization (CIRO) in the year ahead.

On Tuesday, the industry self-regulatory organization (SRO) issued a notice setting out its priorities for its fiscal year (ending March 31, 2027), the final year of its current strategic plan.

Among other things, during the year, CIRO indicated that it expects to finalize proposed rule changes to facilitate “the adoption of an incorporated advisor compensation option” which would then be submitted to the Canadian Securities Administrators (CSA) for final approval.

CIRO first published a paper in early 2024 outlining proposed policy solutions to the question of whether advisors should be able to use corporate structures, and to deal with the disparity between fund dealer reps and investment dealer reps when it comes to the question of compensation structures — an issue that has dogged the industry since the creation of CIRO predecessor, the Mutual Fund Dealers Association of Canada, in the late 1990s.

In addition to its pledge to address the long-standing incorporation issue during the year, the SRO said it expects to publish proposed rule changes that aim to improve the account transfer process — another persistent industry bugbear — along with a second paper on a potential technology-based solution for speeding up transfers.

Last July, the SRO published a white paper on the issue that set out a possible approach to this perennial investor service issue, which included proposals for increased automation and the adoption of a 10-day standard for processing account moves.

Additionally, in the year ahead, the regulator said it’ll be reviewing existing standards for dealing with investor complaints, which has long been an issue for investor advocates, raised most recently by FAIR Canada in an editorial criticizing CIRO’s approach to industry complaint-handling, and calling for the SRO to adopt a 60-day standard.

In its notice, the SRO acknowledged the importance of the issue, saying, “Protecting investors and strengthening confidence in Canadian capital markets is central to CIRO’s mandate. To do that effectively, we need to review complaint handling practices, develop deeper understanding of Canadian investors, build a robust pan-Canadian approach to investor education and stay apprised of emerging trends impacting the industry.”

Finally, the regulator indicated that it intends to implement a concept of “reasonable safeguards” – policies and controls designed to facilitate compliance — particularly to support firms in “demonstrating good-faith compliance” with their obligations under the Client-Focused Reforms.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.