3216. Relationship Disclosure

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    1. Objective of relationship disclosure requirements

      This section establishes the minimum requirements for the provision of relationship disclosure information to retail clients.  Dealer Members are not required to provide relationship disclosure to institutional clients.

      Relationship disclosure information is a written communication from the Dealer Member to the client describing the products and services offered by the Dealer Member, the nature of the account and the manner in which the account will operate and the responsibilities of the Dealer Member to the client.
    2. Frequency of provision of relationship disclosure information

      Relationship disclosure information must be provided to each retail client:
      1. at the time of opening an account or accounts, and
      2. when there is a significant change to the relationship disclosure information previously provided to the client.
    3. Form of relationship disclosure information
      1. Dealer Members have the choice of providing customized relationship disclosure information to each client, or appropriate standardized relationship disclosure information to separate classes of clients.
      2. Where standardized relationship disclosure information is provided to the client, the Dealer Member must ensure that the disclosure is appropriate for the client.  The relationship disclosure information must accurately describe the account relationship the client has entered into with the Dealer Member.
      3. Where a client has more than one account, combined relationship disclosure information may be provided to the client as long as the Dealer Member determines that the combined disclosure is appropriate for the client in light of the relevant circumstances, including the nature of the various accounts.
    4. Format of relationship disclosure information
      1. The format of the relationship disclosure information is not prescribed but must:
        1. be provided to the client in writing,
        2. be written in plain language that communicates the information to the client in a meaningful way, and
        3. include all the required content set out in subsection 3216(5), or, where specific information has otherwise been provided to the client by the Dealer Member, a general description and a reference to the other disclosure materials containing the required information.
      2. Dealer Members may choose to provide the relationship disclosure information as a separate document or to integrate it with other account opening materials.
    5. Content of relationship disclosure information
      1. The relationship disclosure information must be entitled “Relationship Disclosure”.
      2. Subject to clause 3216(5)(iii), the relationship disclosure information must contain the following:
        1. a general description of the types of products and services the Dealer Member will offer to the client including:
          1. a description of the restrictions on the client’s ability to liquidate or resell a security, and
          2. a statement of the investment fund management expense fees or other ongoing fees the client may incur in connection with a security or service the Dealer Member provides,
        2. a general description of any limits on the products and services the Dealer Member will offer to the client including:
          1. whether the firm will primarily or exclusively provide proprietary products to the client, and
          2. whether there will be other limits on the availability of products or services,
        3. a description of the account relationship that states:
          1. whether the account opened is an advisory account, a managed account or an order execution only account,
          2. whether the client is responsible for making investment decisions and, if so, the manner in which the client will instruct the Dealer Member to effect transactions for the account, and
          3. whether recommendations or advice will be provided to the client and, if so, the responsibilities and obligations of the Dealer Member and its employees for any recommendations or advice provided to the client,
        4. a description of the process used by the Dealer Member to determine suitability, including:
          1. a description of the approach used by the Dealer Member to assess the client’s personal and financial circumstances, investment needs and objectives, investment time horizon, risk profile and investment knowledge,
          2. a statement that the client will be provided with a copy of the “know-your-client” information that is obtained from the client and documented at time of account opening and when there are significant changes to the information,
          3. a statement that the Dealer Member will determine that any investment action it takes, recommends or decides on, for the client is suitable for the client and puts the client’s interest first, including when:
            1. securities are received into or delivered out of the client’s account by way of deposit, withdrawal or transfer,
            2. there is a change in the Registered Representative, Portfolio Manager or Associate Portfolio Manager responsible for the account,
            3.  the Dealer Member becomes aware of a change in the retail client’s information collected in accordance with subsection 3202(1) that could result in the retail client’s account not satisfying subsection 3402(1),
            4. the Dealer Member becomes aware of a change in a security in the retail client’s account that could result in the account not satisfying subsection 3402(1), or
            5. the Dealer Member reviews the retail client’s information in accordance with subsection 3209(4), 
          4. a statement indicating whether or not the suitability of the investments held in the account will be reviewed in the case of other triggering events not described in paragraph 3216(5)(ii)(d)(III) and, in particular, in the event of significant market fluctuations,
        5. a description of the client account reporting that the Dealer Member will provide, including:
          1. a statement indicating when trade confirmations and account statements will be sent to the client,
          2. a description of the Dealer Member’s minimum obligations to provide performance information to the client and a statement indicating when account position cost and account activity information will be provided to the client, and
          3. a statement indicating whether or not the provision of account percentage return information will be an option available to the client as part of the account service offering,
        6. a statement indicating that any Dealer Member and Approved Person existing material conflicts of interest, and material conflicts of interest that are reasonably foreseeable, which are  not avoided, will be addressed in the best interest of the client and will be disclosed, where required, to the client in a timely manner, upon identification of the conflict,
        7. a general description of any benefits received, or expected to be received, by the Dealer Member or the Approved Person, from a person or company other than the Dealer Member’s client, in connection with the client’s purchase or ownership of a security through the Dealer Member,
        8. a description of all account service fees and charges the client will or may incur relating to the general operation of the account,
        9. a description of all charges the client will or may incur in making, disposing and holding investments by type of investment product,
        10. a general explanation of the potential impact on a client’s investment returns from each of the fees and charges described in 3216(5)(ii)(a)(II), and 3216(5)(ii)(h) and (i), including the effect of compounding over time,
        11. a listing of the account documents required to be provided to the client with respect to the account,
        12. a description of the Dealer Member’s complaint handling procedures and a statement that the client will be provided with a copy of an IIROC approved complaint handling process brochure at time of account opening,
        13. a general explanation of how investment performance benchmarks might be used to assess the performance of a client’s investments and any options for benchmark information that might be made available to the client by the Dealer Member,
        14. a description of the circumstances under which a Dealer Member might disclose information about the client or the client’s account to a trusted contact person referred to in subsection 3202(4), and
        15. a general explanation of the circumstances under which a Dealer Member or Approved Person may place a temporary hold under section 3222 and a description of the notice that will be given to the client if a temporary hold is placed or continued under that section.
      3. For order execution only accounts, the Dealer Member does not have to provide the relationship disclosure information required under sub-clause 3216(5)(ii)(d), provided that disclosure is made in compliance with the requirements in section 3241.
    6. Review of relationship disclosure materials
      1. The relationship disclosure information provided to the client must be approved by a partner, Director, officer or designated Supervisor.  This approval must occur regardless of the form the relationship disclosure information takes.  If the document is a standardized document, the designated Supervisor must ensure that the correct document is used in each client circumstance.  If the relationship disclosure information is a customized for each client, the designated Supervisor must approve each document. 

    There is no history log for this rule.

    There is no history log for this rule.