On July 15, 2021, the Canadian Securities Administrators (CSA) published final amendments of National Instrument 31-101 Registration Requirements, Exemptions and Ongoing Registration Obligations designed to improve protection of older and vulnerable clients across Canada. According to the CSA, the amendments strengthen protection of older and vulnerable clients through two main components:
- Trusted Contact Person (TCP) – registrants will be required to take reasonable steps to obtain the name and contact information of a TCP from individual clients, and written consent for the TCP to be contacted in specified circumstances (e.g. if the registrant has concerns about possible financial exploitation of a client who is vulnerable or about the client’s mental capacity to make decisions involving financial matters), A TCP does not have authority to make transactions on the account; however, is intended to be a resource to assist registrants in protecting a client’s financial interests or assets in these circumstances. While clients are not required to identify a TCP in order to open an account, registrants will be required to take reasonable steps to obtain and update TCP information as part of the Know Your Client process.
- Temporary Holds – the amendments create a regulatory framework for registrants who place a temporary hold on transactions, withdrawals or transfers in circumstances where the registrant has a reasonable belief that there is financial exploitation of a vulnerable client or where there are concerns about a client’s mental capacity to make decisions involving financial matters.
The CSA worked with the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) to develop the amendments. The amendments will apply to all registered firms, including members of IIROC and the MFDA. IIROC and the MFDA plan to implement corresponding amendments to the IIROC Rules and MFDA Rules, respectively. All the amendments come into effect on December 31, 2021.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
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