Question of the Week: What Client Focused Reforms (CFRs) are coming into effect Dec 31, 2021?

Submitted by nsscadmin on Wed, 12/22/2021 - 09:00

On December 31^st the remainingClient Focused Reforms (CFRs) will come into effect. Here’s a brief rundown and what this means for clients and registrants.

Relationship Disclosure Info (RDI)

RDI requirements are being expanded and will now require registrants to inform clients about potentially significant restrictions, costs and limitations related to investment products being offered.

Know Your Product (KYP)

Under new KYP requirements, registrants and registered firms must take reasonable steps to understand any securities that are purchased or sold for, or recommended to, their clients. This includes things like structure, features, risks, and all initial and ongoing costs.

Know Your Client (KYC)

The process of collecting KYC information from clients is being expanded. KYC information must also be updated and checked at minimum intervals, to ensure it is current.

Suitability

Rules have been amended to specifically state that a registrant must put their client’s interest first when making a suitability determination. Ongoing suitability determination is required when reviewing a client’s account and acting on client’s instructions.

Misleading Communications

This is an explicit requirement that registrants not hold themselves out in any manner that could deceive or mislead existing or prospective clients with respect to their proficiency, experience, or qualification, and products and services provided.

Compliance Training

Registered firms must provide ongoing compliance training to their registered employees, including how to meet new CFR obligations.

For more information on CFRs please see Reforms to enhance the client-registrant relationship (Client Focused Reforms) Notice of amendments to National Instrument 31-103 and companion policy 31-103CP

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.