Proposed amendments by the Canadian Securities Administrators relating to addressing issues of financial exploitation and diminished mental capacity of vulnerable clients

Type: Rules Notice> Technical
Rule connection:
Legacy DMR Rules
Distribute internally to:
Legal and Compliance
Senior Management


Charles Piroli
Director, Member Regulation Policy

Today the Canadian Securities Administrators (CSA) published a Notice and Request for Comment (CSA Notice) requesting comments on proposed amendments (Proposed Amendments) to:

  • National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103); and
  • Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations.

The Proposed Amendments are intended to enhance investor protection by addressing issues of financial exploitation and diminished mental capacity of vulnerable clients.

A working group comprised of the CSA, IIROC and the Mutual Fund Dealers Association of Canada (MFDA) developed the Proposed Amendments. IIROC was pleased to work together with the CSA and the MFDA on this initiative and is supportive of the Proposed Amendments. 

Applicability to Dealer Members

The Proposed Amendments will apply to all registered firms, including Dealer Members (Dealers).1   Therefore, we encourage Dealers to review and comment on the Proposed Amendments.2

Comments on the Proposed Amendments must be submitted in writing on or before June 3, 2020. Details on how to submit comments are set out in the CSA Notice in the “Request for Comments” section.

Summary of Proposed Amendments

The Proposed Amendments will:

  • require registrants take reasonable steps to obtain the name and contact information of a trusted contact person (TCP) from each client, as well as the client’s written consent to contact the TCP in prescribed circumstances;
  • not prohibit registered firms and registered individuals from placing a temporary hold on the purchase or sale of a security or withdrawal or transfer of cash or securities from a client’s account, if the registered firm reasonably believes that either:
    • a vulnerable client is being financially exploited; or
    • with respect to an instruction given by the client, the client does not have the mental capacity to make financial decisions; and
  • require registered firms take certain prescribed steps if they place a temporary hold in the above noted circumstances.
  • 1 Dealers will be subject to the Proposed Amendments because they are not exempt from the applicable sections of NI 31-103 to which the Proposed Amendments relate. See section 9.3 of NI 31-103 which lists the sections of NI 31-103 that do not apply to Dealers.
  • 2At a later date, IIROC may propose conforming amendments to the IIROC Rules that are consistent with the Proposed Amendments.

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