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 clauses 3216(5)(iii) and 3216(5)(iv), the relationship disclosure information must contain the following: 
        1. a description of the types of products and services offered by the Dealer Member,
        2. 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, 
        3. a description of the process used by the Dealer Member to assess investment suitability, including:
          1. a description of the approach used by the Dealer Member to assess the client’s financial situation, investment objectives and time horizon, risk tolerance 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 material changes to the information,
          3. a statement indicating that the Dealer Member will assess the suitability of investments in the client’s account: 
            1. before a trade is accepted,
            2. before a recommendation is made,
            3. when securities are transferred or deposited into the account,
            4. when there is a change in the Registered Representative, Portfolio Manager or Associate Portfolio Manager responsible for the account, or
            5. when there is a material change to the client’s “know‑your‑client” information, and
          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)(c)(III) and, in particular, in the event of significant market fluctuations,
        4. 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,
        5. a statement indicating any Dealer Member and Approved Person conflicts of interest, and a statement that any existing and potential material conflict of interest situations which are  not avoided, will be disclosed to the client as they arise,
        6. a description of all account service fees and charges the client will or may incur relating to the general operation of the account,
        7. a description of all charges the client will or may incur in making, disposing and holding investments by type of investment product, 
        8. a listing of the account documents required to be provided to the client with respect to the account, 
        9. 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, and
        10. 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.
      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)(c), provided that disclosure is made in compliance with the requirements in section 3241.
      4. For managed accounts, the required disclosure referred to in paragraph 3216(5)(ii)(c)(III) does not apply and the relationship disclosure information provided by the Dealer Member must include a statement that ongoing suitability is provided as part of the managed account services.
    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.  
    7. Audit trail and client acknowledgement requirements 
      1. The Dealer Member must maintain an audit trail to evidence that account related documents required by IIROC requirements have been provided to the client.  
      2. Dealer Members must obtain their clients’ acknowledgement of receipt of the “know‑your‑client” information.  A client signature acknowledging receipt is preferred, but not required.  If the client’s signature is not obtained, another acceptable method of documenting the client’s acknowledgement of receipt of this information must be used.

    There is no history log for this rule.

    There is no history log for this rule.